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The Capital Markets Post-Bernanke

04/25/2011

The capital markets are preparing for a unique FOMC meeting that includes an inaugural press conference by  Federal Reserve Chairman Ben Bernanke. At 12:30pm on Wednesday, the FOMC meeting statement will be released. The inaugural press conference with Chairman Bernanke begins at 2:15pm. He will deliver an opening statement, followed by a Q&A session until 3pm.

I applaud Ben Bernanke's commitment to a more transparent FOMC and expect that the inclusion of these occasional post-meeting press conferences will allow investors to make better informed decisions. The next FOMC meeting is scheduled for June 22.

Investors should watch for guidance on the following on Wednesday:

  • Confirmation the asset purchases related to QE2 will end in June as scheduled
  • The strategy for reinvesting maturing securities beyond the end of QE2 in June  
  • Economic outlook incorporating higher inflation, modest labor growth, and moderating GDP growth in Q1
  • If housing is still "depressed" in their outlook

Market Implications - I expect much of the same for the capital markets - further appreciation circa 1995. Not much should change post FOMC. We remain in the "sweet spot" with excellent corporate earnings, a weakening U.S. dollar, and easy monetary policy. 

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.