Fed Minutes a Long-Term Positive for Markets: Pro
Federal Reserve officials have put a damper on hopes of another round of stimulus in the U.S., as minutes from last month’s Fed meeting revealed that only two central bankers indicated that more quantitative easing may be needed to support the economy.
Although markets respondednegatively to the initial report, Dan Greenhaus, chief global strategist at BTIG, told CNBC on Wednesday that the minutes will have a positive long-term effect on the markets.
The minutes represent increased confidence in the recovery, Greenhaus said.
“The economic and fundamental data have been improving for a while, and that is supportive of a generally improving investment landscape. Yesterday’s data plays into that story.We’ve had an incredible rally.” But he noted that it's not all good news.
“There are of course headwinds going forward, and the Fed recognizes this, which is one reason why they are not stepping back from easing entirely,” he said.
“A lot of those headwinds emanate out of Europe and the Federal Reserve. Investors remain very concerned about what’s going to happen when you have elections in Greece, when you have elections in France, and then of course elections in the U.S.,” Geenhaus explained.
Additional short-term concerns stem from seasonal market trends.
“We are of course entering the worst seasonal period for equities: the sell-in may go away, period,” Greenhaus said.
“I wouldn’t be surprised at all if we traded sideways or recouped some of these gains over the next couple of weeks and months.” But Greenhaus advises investors to focus on fundamentals and avoid getting carried away in the short-term.