Recently I was asked to discuss the state of the market so far in 2014
and to offer some thoughts on where we see opportunity. It is certainly
a challenging market with complications provided by the Fed’s necessary
but disruptive move to taper its monetary stimulus and the extremely
cold weather across the United States. Despite this year’s rocky start,
investors are still overwhelmingly bullish even as fundamental
valuations are getting stretched ever tighter.
In voting unanimously to continue reining in its monetary stimulus, the
Federal Reserve this week made it clear that its focus is squarely on
the U.S. economy, even if its decisions add to the current pressure
being felt in emerging markets.
The Federal Reserve holds its first meeting of 2014 next week, and it’s
likely to be an eventful gathering. It will be Ben Bernanke’s final days
as Fed chairman before handing over the gavel to Janet Yellen, the first
woman to hold that position, and the policymakers are expected to trim
another $10 billion from the Fed’s monthly bond-buying program.
Just when the Federal Reserve thought it was safe to start slowly
dialing back its monetary stimulus program, out comes a surprisingly
weak December jobs report that raises questions about how sturdy the
economy actually is.