The Fed: No Easing Yet
The Fed, after weeks of speculation, said that for now there would be no new quantitative easing (QE3), though it acknowledged the slowing economy.
The market was disappointed and moved lower on the announcement. John Manley, Chief Equity Strategist at Wells Fargo Advantage Funds, explains:
“It’s a classic example of ‘what have you done for me lately’ and I think the fact that there weren’t trillions of dollars headed in our direction disappointed some people and they sold stocks they bought before – probably sold at a profit… the market pulls back and then at the end of the day, well – you know things aren’t that bad, you know we are not about to fall apart right now, the economy is growing albeit slowly.”
Slowly, indeed. Private employers created 163,000 jobs in July, according to payroll company. That’s more than expected but not enough to bring down the unemployment rate.
Manufacturing activity contracted last month as exports continue their freefall, according to the Institute for Supply Management
The FOMC is set to meet in September to address interim economic data and, once again, the question of QE3.