The Capital Markets Post-Bernanke
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.