The mainstream financial media is currently bemoaning this week's Federal Reserve press conference, suggesting that the central bank head should have been more cautious in his hinting of the so-called "taper," which references the eventual withdrawal of monetary support programs.
However, the reality is that today's financial journalists – both American and international – are looking at the wrong end of the problem when ascertaining both how and why the developments of this week matter so much. Instead of commenting on the eventuality of a reduction in Fed activity in stock and equity markets, Bernanke, in many more words, stated clearly that the U.S. central bank will not be there to help in the near future.
The evidence lies in comments made by St. Louis Fed President James Bullard, who voiced the dissenting vote at the most recent Federal Open Market Committee (FOMC) meeting. According to a press release from the regional central bank branch, Bullard made it clear that he is against any kind of date targeting for the conclusion of the Fed's quantitative easing initiative.
"President Bullard feels strongly that state-contingent monetary policy is best central bank practice, with clear support both from academic theory and from central bank experience over the last several decades. Policy actions should be undertaken to meet policy objectives, not calendar objectives," the agency wrote.
On the surface, this suggests that Bullard is at odds with Bernanke's implicit desire to let the markets work by themselves. However, this statements indicates that the Fed is making a concerted effort to make "tapering" more than an expectation for investors and traders who have become used to frequent Fed intervention.
As the last 48 hours have shown, global stock exchanges are reacting poorly to Bernanke's press conference and the effects could be long-lasting. Independently minded investors should do all they can to protect themselves from volatility, especially if they are approaching retirement. Those interested should explore GreatWealthStrategies.com today to look into ways to hedge against and even thrive financially in a risky environment.