Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Futures are screaming higher today as last evening it was reported that Larry Summers “withdrew” (ahem) his name for consideration for the Federal Reserve chairmanship. As he is seen EVER so slightly more hawkish than Yellen, the market is reacting in predictable fashion … “more morphine for longer! yes!” From another perspective this is a positive simply for the fact that Rubin+Summers essentially destroyed the banking regulatory safeguards that had kept the financial system somewhat intact for many decades… so offering the top banking regulatory job to a man who did that, would have been amazing. The fact it was even a reality is… amazing.
Turning back to the market, last week we had a burst early and then sideways action to work off an oversold condition. We are now firmly back in a V shaped rally.
All eyes this week will be on the FOMC meeting and news conference Wednesday. Many expect the first step to reduce QE to be announced to the tune of 10-15B a month, focused mostly on Treasuries so that the Fed can continue to support the housing market. It is possible this has already been priced into the market per the backup in Treasury rates the past few months. A potential upside surprise is Ben kicking the can on any reduction in QE. There are some housing reports on the economic docket but really this week is all about the Fed as Syria seems to be on the backburner.
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