Well That Was Disappointing

lance_HSWere you as disappointed as I was?

At the much-anticipated federal open market committee meeting, Federal Reserve chair Janet Yellen continued her same dovish banter. Based on her comments, it seems that the Fed has been swayed by outside criticism (China, ECB, and IMF).

Yellen explained during her press conference that her biggest concern was low inflation and the continued slack in wage growth. She added the negative effects that the strong U.S. dollar has on exports.

Most interesting though, she admitted that concerns over China’s economic slowdown and market problems weighed on the committee’s decision. As with the strong dollar and low inflation, that’s another problem that’s not going away anytime soon. So it’s a tough one to admit.

There was one lone dissenter, the Richmond Federal Reserve Bank’s Jeffrey Lacker, who voted for a quarter-point hike. I thought it would have been a closer vote.

Still, I wasn’t surprised. And I’m not entirely sure a rate hike would have made much of a difference either. While the Fed may have feared a sell-off in the stock market, bond traders had already priced in a hike. And by the reaction in stocks, a hike may have indicated strength in the economy that no one but the Fed saw coming. But the Fed disappointed everyone and stocks moved lower anyway. So there’s that.

Yellen says a hike is still in play for the October meeting and that she’ll call a press conference if that ends up being the case. Don’t hold your breath waiting though. The Fed’s decision could go either way and won’t have a big effect on the market by itself.

Despite the Fed’s inaction, subscribers of Dent Digest Trader were able to cash in on the volatility and profit last week. For now, the markets will have to remain on edge until at least October while the Fed resumes its diabolical scheming. But like I said, don’t hold your breath.

Lance Gaitan

Lance Gaitan
Editor, Dent Digest Trader

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Categories: Interest Rates

About Author

Lance Gaitan graduated from Franklin University in Columbus, OH with a degree in Finance. After graduating and working as an auditor for an insurance administrator as a number of years, he attained his securities license. He then went to work as a broker for a small firm and during the mid-1990’s Lance managed the futures trading desk for Piper Jaffray, a large regional brokerage firm based in Minneapolis. After migrating to Florida in early 2000, Lance founded a futures trading firm, GSV Futures, specializing in retail commodity trading strategies. Lance sold that business in 2006 and joined Harry Dent, Jr. and Rodney Johnson at Dent Research shortly thereafter.