So the Fed left rates unchanged and gave us dovish forward guidance. The Fed statement also downplayed the strength of the U.S. economy and instead worried about foreign market volatility. This is very troublesome. By ignoring their mandates and playing into foreign market volatility the Fed has tied our fortunes to the truly unknown. The way that U.S. equities are reacting right now is as if people have gotten fed up with the Fed. I think the Fed finally went to the well one too many times and its finally run dry. The good news is that domestic equities (companies with little international exposure) are going to fare well going forward. The fact of the matter is that domestic consumption is strong. Employment data is strong. Services business data is strong. Today will definitely be a rough ride though.
Now, just scratching the surface of yesterdays current account data shows the U.S. economy is becoming more and more insulated from foreign volatility. This only makes the Feds current stance that much more perilous for the U.S. Anyways, I’ll have much more to say later on these facts and more as I recover from being suckered by the Fed for the last time.