Fed Minutes Reveal Absence of Easing Consensus

(eToro Blog) Wall Street logged its 5th consecutive decline yesterday, after the Federal Reserve minutes suggested that the central bank was unwilling to take any additional steps to shore up the flailing economy, unless and until it significantly worsens. While the Fed acknowledged that they would consider QE3 under certain conditions, as of now they are far short of the consensus needed to move to a more accommodative stance. Some analysts feel that the Fed is taking a great risk by doing nothing, as the conditions could quickly deteriorate to a point that the Fed won’t be able to head off a slide.

While some analysts had initially felt the Fed would make a move before the presidential elections take place in early November, the feeling now is that they won’t want to be perceived as playing “partisan politics.” Some believe that even if the Fed makes an easing decision at their next (September) meeting, implementation might not be until after the election.

The issue for many market players is how much worse does it have to get? Economic data points and the U.S. labor market have struggled for traction over the past several months, with little hope of improvement given the current environment. With that in mind, it’s no surprise that Wall Street was disappointed; the DJ30 closed down 0.38% the NASDAQ fell 0.49% and the SPX500 closed essentially flat.

On OpenBook, sentiment among DJ30 traders is primarily bullish, with 86% buying. French trader solange67 has closed three short positions in the DJ30 over the past 24-hours, on average each has gained about 5%. For the week, the trader had allocated 77.4% of the portfolio to the DJ30, which has gained 10.1%. For the last week, the trader’s stats showed a healthy 130% profit.

OpenBook trader FabrizioC82 from Germany earned 33.33% on a short position in the NSDQ100; the trader has had a 44.6% allocation in the NSDQ100 over the past month, which has earned 33.3%, the highest within the portfolio. The trader has a 30.4% profit for the past week, and 15.5% for the past month.

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