Tags: Timmer | Fed | stocks | easing

Fidelity's Timmer: Fed's 'Caution' Bullish for Stocks

By    |   Wednesday, 15 April 2015 06:40 AM

While the Federal Reserve has dropped the word "patient" from its policy statement, all indications are that it will wait until at least September to begin raising interest rates.

And that's good for stocks, says Jurrien Timmer, director of global macro strategies at Fidelity Investments.

"I wasn't as comfortable six months ago, because the Fed seemed determined to go a certain route no matter what anybody said, but I think they are heeding the message of the market now and are erring more on the side of caution," he told the Financial Post.

"The Fed is getting the message. The gap between what the Fed was saying and what the market was saying has shrunk."

Many economists believe the Fed will indeed move on rates in September. The central bank has kept its federal funds rate at a record low of zero to 0.25 percent since December 2008.

The Fed's massive easing program has played a major role in the stock market's six-year bull run that has seen the S&P 500 index triple.

"Global easing continues unabated and in the context of a modestly positive economic backdrop, it should be bullish for risk assets," he noted.

Plenty of economists criticize the Federal Reserve for its massive easing program, saying it's raising the risk of asset bubbles without helping the economy much.

But Richard Salsman, president of InterMarket Forecasting, put his criticism in particularly colorful terms.

"Slowly but surely, the U.S. Federal Reserve has institutionalized a similar type of monetary fiscal prostitution" as Japan, he writes in a commentary. "The Eccles Building [the Fed's headquarters] in Washington, D.C. has become a mere marbled house of ill-repute."

Salsman sees no end to the Fed's low interest-rate policy. "The Fed will keep mimicking the low-rate policy launched by the Bank of Japan and keep the fed funds rate below 3 percent indefinitely," he states.

Many experts think the fed funds rate will top out at 2 percent for the next few years, a far cry from the 4 percent norm of recent history before the 2008 financial crisis.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
While the Federal Reserve has dropped the word "patient" from its policy statement, all indications are that it will wait until at least September to begin raising interest rates.
Timmer, Fed, stocks, easing
347
2015-40-15
Wednesday, 15 April 2015 06:40 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved