Via Bloomberg News
Federal Reserve Chairman Ben S. Bernanke is putting investors on notice that the central bank is prepared to begin phasing out one of the most aggressive easing programs in its century-long history later this year.
The Fed will probably taper its $85 billion in monthly bond buying later in 2013 and halt purchases around mid-2014 as long as the world’s largest economy performs in line with Fed projections, Bernanke told reporters yesterday in Washington after a two-day meeting of the Federal Open Market Committee.
The US stock market sold off yesterday and today. The Wall Street Journal commented:
Stocks started the day with broad declines but dropped to session lows late in Thursday’s session. The Dow Jones Industrial Average shed 350 points, or 2.3%, to 14757, on pace for its biggest decline of the year. The Standard & Poor’s 500-stock index lost 39 points, or 2.4%, to 1589. The Nasdaq Composite Index fell 78 points, or 2.3%, to 3364.
We are of the opinion that the correction that we are seeing is probably overdue. We hope that the banks, who should have learned their lesson in 2008, will not find themselves overextended again, but greed is a powerful motivator. Be prepared for a bumpy ride.