Economic forecasts for 2012 were downgraded with GDP lowered from 3.5% to 2.7% and unemployment raised from 8.0% to 8.6%. Knowing the Fed is in the game of confidence building you can trust that these estimates are overly optimistic.
Those are some serious downgrades and yet the Fed did not mention further QE beyond the blanket statement “we are prepared to use all of our tools.” When asked repeated times during the press conference he again appeared to give no signal of any future QE. In fact at one point he questioned how effective future monetary policy is now versus in the past.
He even went as far as to blame US economic weakness on “bad luck” and the “events out of Europe.” So the man in charge of monetary policy appears to have few if any tools left and worse a complete failure to understand what is driving past and future economic weakness.
As for today’s price action, one word divergence.
Short Term – Intraday 10 Year Yield (TNX) VS SPX
Long Term – Daily 10 Year Yield (TNX) VS SPX
Few Other Market Notables
The AUD/USD was rejected at the 200MA as confirmation of Tuesday’s failure to find support at this key level.
The EUR/USD after failing at the 200MA failed to put in new highs today and was rejected at the 100MA.
Lately it seems every time AAPL catches any bid it is on the top of the selling on strength report. Today was no different but making it even more interesting is how AAPL lagged the indices all session and still was sold, not accumulated.
The Vix did not pullback any where near the levels you would expect with equities up so much intraday and after a massive advance the prior day. As a reminder the Vix was up 16% on Tuesday and at one point 25% intraday.
Volume on the SPY was horrid and half the level of Tuesday and well below the 50 day moving average volume.
The USD made a nice technical pullback, found support at the 50MA and move off the lows of the session.