As we observed yesterday, the market action over the past weeks can be summarized with one word: untaper. Specifically, in light of recent data, the Koolaid addicts had hoped that the crunch in the economy would be sufficient for the Fed to taper the taper, and slow down its removal of crutches, which ironically means that the media should have been focusing on the real causes of the winter swoon - i.e., the tapped out consumer and not blaming snow in the winter. Alas, for all those who had hoped that Yellen would promptly shift to Untaper mode, Fed uber dove Williams has just one present: a glass of (appropriately) ice cold water.
As expected:
- WILLIAMS SAYS ‘RECENT DATA HAS BEEN SOMEWHAT DISAPPOINTING’
However,
- WILLIAMS SAYS POLICY SHOULD TAKE MEDIUM TERM VIEW
FED’S WILLIAMS SAYS ECONOMY LOOKING ‘REALLY SOLID’ FOR THIS YR
Which means:
- FED’S WILLIAMS: ‘HURDLE IS PRETTY HIGH’ FOR CHANGING TAPER PACE
FED’S WILLIAMS SAYS NOW IS TIME TO FOR PULLING BACK QE
And keep in mind Williams is about as dovish as they come: there is hardly anyone on the FOMC who wanted the taper to taper more than Williams. End result: sharp pullback in stocks which after touching briefly unchanged for the year, have taken a sharp leg lower.
[2]