That’s right… ‘Fecstasy’ is our combination term for ‘Fed’ and ‘ecstasy’, which seemed to grip the U.S. equities market after Wednesday afternoon’s FOMC announcement and follow up Chair Yellen press conference. Wednesday morning’s Rohr-Blog (www.rohr-blog.com) Quick Take: ‘Fecstasy’ or ‘Fedache’? post covered the reasons why the Fed Chair had both latitude and incentives to remain circumspect on the future federal funds' rate path. Yet there were two key highlights on why that was such a strong probability. In the first instance, while some economic improvement is clear after the long struggle through most of the regulation-heavy Obama years, there is still quite a divide between actual economic growth and the anticipation. The more upbeat sentiment is based on assumptions from the Trump administration reform and stimulus plans.
The latter are no doubt a good reason that equities had rallied as far as they did into the stellar blowoff to the new all-time high right after Mr. Trump’s Tuesday, March 1st address to Congress. Yet as noted early on in this Wednesday’s morning’s post, while edging up from the very weak multi-year U.S. GDP growth below 2.00%, the expectation it can gallop up to 3.00% or higher levels anytime soon is tied into Trump reform agenda success.