• The Federal Reserve is expected to announce a 'Tapering' of its QE3 program on Wednesday
• Markets have moved to price in this event, but there is room for volatility and underlying shift
• There are trading opportunities before and after the FOMC announces its decision
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The entire trading week ahead of us revolves on a single piece of event risk: the FOMC rate decision. Economists, fund managers, the media and traders have drawn a consensus for a Semptember Taper. However, the adjustment from the capital markets to this point far from negates the ultimate impact this event will have. The actual announcement may end up being the least remarkable development through the week. Yet, in the lead up to the meeting, there is short-term speculative positioning that presents a risk and opportunity. And, more importantly, there is a glaring apathy to positioning in key capital markets like US equities that disregard record leverage built on cheap funds, dwindling participation and a clear connection to the path of monetary policy. We discuss the importance of this event risk in the weekend video along with the short, medium and long-term implications for our trading.