The money trade: dollar gets nuked, run up stocks.
The major indices stage a rally into positive territory, because the Fed has opened the door to quantitative easing. The key is the sentence that was not in the last statement: the Fed "is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate."
There were mixed changes in the economic outlook (underlined is new wording):
1) "Business spending on equipment and software is rising, though less rapidly than earlier in the year."
2) "Bank lending has continued to contract, but at a reduced rate in recent months."
3) "Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability."
Will QE really help the stock market? Most traders think that printing money will lift asset prices. That's the theory.
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