Art Cashin’s Take On Yesterday’s Chaos & Where We Are Now
September 19, 2013
Today King World News wanted to share the thoughts of 50-year veteran Art Cashin in the aftermath of the Fed’s historic decision and subsequent market chaos. Cashin, who is Director of Floor Operations at UBS ($650 billion under management), had some fascinating insights — I guess that comes with half a century of experience.
Art Cashin: “Holy Moley! Maybe It Was “Data Driven” – The Fed shifted policy to shock and awe yesterday by doing nothing. The FOMC surprised markets in every asset class by not implementing the nearly universally expected “taper lite”. The reaction was sudden and violent. Stocks shot up 200 points. Gold rocketed over $50 (the equivalent of a 450 point move in the Dow).
Virtually every asset had a dramatic instant reaction. Bonds soared as did things like utilities, REITs, MLPs, and housing stocks. The dollar plunged. Some media folks masterfully understated the case, saying the Fed move surprised some folks who had misread the Fed’s intentions. “A few people”? There was a global reaction – hardly a few people. And, the change was in billions of dollars, probably hundreds of billions.
Traders were somewhat stunned to hear Mr. Bernanke say that a good part of the decision was based on the negative effect of the recent rise in interest rates. It was Mr. Bernanke’s own remarks several months ago that started that rise in rates. The Fed could have stemmed or even reversed that rise by hinting that tapering might be delayed. Mike O’Rourke at Jones Trading succinctly summed up the view of many traders in this paragraph noted by Business Insider: