As expected, the Fed gave the market what it wanted, full quantitative easing until a 6.5% unemployment rate is seen, probably sometime around 2015. This assumes, of course, that monetary policy alone can bolster employment, which so far has not proven to be the case given nearly four years of various QE incarnations. It could be argued that the longer-term unemployed giving up and exiting the labor force and the shift in more employment to part-time work has done more to lower the unemployment rate than zero interest-rate monetary policy.
The Fed's January meeting suggested an eventual return to moderate economic growth and that the housing sector improved while they were little concerned with inflation. That said, Bernanke reiterated that the recovery is fragile so the easy money policy is necessary. Markets rallied and finished the day up but on lower volume.
Mild market nervousness shows the futures down slightly as the European Central Bank gave a deadline on a Cyprus bailout deal, saying it would suspend an emergency liquidity lifeline for the country’s banks on Monday unless a rescue program is in place. As with other deadlines over the past year, markets sell off then find their footing as a deal is eventually reached. The Cyprus situation is likely to resolve sooner than later if history is any guide to crises situations. But again, price/volume remains our guide rather than any interpretation of prediction of the outcome of any such event.
Oracle Corp. (ORCL) missed its revenue estimates by a large margin, causing the stock to gap-down over -5% after the close yesterday, sending NASDAQ futures sharply lower. This will result in a lower open for the market this morning unless the futures are able to rally sharply, which does not appear to be the case at the time of this writing.