9:00am (EST)

The bulls were comfortably holding support heading into yesterday’s Fed Minutes so unless they said something terrible, there was a good chance there would be a market bounce if their production meeting earlier this month yielded any clues on possible further quantitative easing.  Bingo.

The Fed said “many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery”.

Apparently, they are discussing a number of ways to pump more money into the economy, including extending the Federal Funds Rate, which is near zero, beyond 2014.  Another grand idea was coming up with different guidance that was more directly linked to the economy or removing any guidance as to when the Fed Rate would increase.   

There was also talk of a new round of aggressive asset purchases that would help push down interest rates overall.  In the end it was all bull but it does appear the Fed is willing to pull the trigger, at some point, if they have too. 

The next Fed meeting is in mid-September which could be the last time they are able to do something ahead of the Presidential elections.  The Fed does not want to appear to favor one party or the other but Wall Street took yesterday’s minutes as good news as that the Fed is more likely to act sooner rather than later.

The rebound off the lows pushed positive territory by the close but the market ended mixed as the bulls and bears each got a piece of the pie.  If we were the official scorekeepers we would give the win to the bulls. (continued…)


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