Two months of 2014 are in the books, and stocks are mostly (and modestly) higher, as are bonds. The Fed is still on the side of growth and, but for the bad weather, the economic momentum of the second half of 2013 is likely to have continued into the new year. Of course, bad weather – and other bad things – are always possibilities that investors have to account for.
Economic news has continued to run generally on the weak side of expectations, but “bad weather” apparently covers for a multitude of sins. Markets were pretty flat last week, with stocks not far off their highs. It was a week of disclosures for the Fed: investors focused a lot of attention on what the Federal Reserve was saying and thinking at last month’s FOMC meeting and at the 14 policy meetings during the financial crisis of 2008.
Stocks snapped back from January’s slump with 2% or better gains last week. Janet Yellen, in her debut testimony as Federal Reserve Chair before Congress, indicated that the Fed is going to remain on its path of tapering its bond purchases in 2014 in “measured steps” – barring a significant change in prospects for employment or inflation. Follow the link below for our review.