FOMC Summary

Before the FOMC meeting just about all sectors traded lower as expected whenever a Fed announcement is looming and investors are concerned about the security of economic stability. I took this opportunity to go long on some positions and managed to get some very favorable deals on a few gold and silver positions as the market reacted to the Fed Statement at 2 o’clock.

Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to remain subdued for some time before rising to levels the Committee considers consistent with its mandate.

The market reacted swiftly with a dollar down, equities up, treasuries up, gold up movement. My positions didn’t close out as high as I would have liked but I am not concerned that some of them did not break even from yesterday’s close because of the way the Fed statement was worded. Yes, they said that inflation is lower than they would like, which means that gold may trade flat or even lower in the next week or so, but instead of saying something like “GDP is not where we would like it, or “retail sales are not high enough”, they simply come out and say the word “inflation”. Which means, their target is to increase the money supply by any means necessary in the near future. In other words, there shouldn’t be a need to buy puts, or sell longs, I think we should take this as a time to increase positions.

After a month of 10-15% gains in commodities, the Fed thinks inflation is too low, and they plan to increase those numbers however they can when they feel it will be necessary. The question I must ask now is; what exactly would be “too high”?

Advertisements

About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: