Markets have been choppy since the page turned to another year. Uncertainty about the withdrawal of economic stimulus by the Federal Reserve, the pace of economic growth, and the potential for contagion spreading from emerging markets have been leading causes.
This week we examine these issues as they relate to one another. We believe reasons exist for cautious optimism. The first article summarizes the Federal Reserve policy making decisions reached last week. The next article looks at the pace of growth in the fourth quarter. The final article examines recent volatility in emerging markets.
A quiet exit from a noisy world. The Federal Reserve policymaking committee voted to continue scaling back its large scale asset purchase program, reducing purchases by another $10 billion a month, to $65 billion a month. It was the first time since 2011 that the committee reached a unanimous decision. The committee said the action was justified by “growing underlying strength in the broader economy.”
The Economist (tiered subscription model).
Growth picks up. The U.S. economy expanded at a 3.2 percent pace in the fourth quarter, laying the groundwork for further improvement in 2014. This is an especially good number for the fourth quarter, considering that the 16-day partial shutdown of the federal government in October held back economic growth. For all of 2013, the economy expanded 1.9 percent after a 2.8 percent increase in the prior year. Leading the way was consumer spending and corporate spending on equipment—both signs of confidence gaining momentum.
No reason for panic. Despite evidence of growing economic strength worldwide, markets have been choppy, led by nervousness about emerging markets, which weigh on U.S. equities. According to The Economist, there is no reason for a broad emerging market crisis. Fundamentals remain intact. Concerns have been raised about tapering of the Federal Reserve’s large scale asset purchase program and slower Chinese growth. “If enough investors get nervous, money will flood out The Economist (tiered subscription model). And in case you missed it, click here to read last week’s blog post which reviews the new leader of the Federal Reserve, Janet Yellen. We hope you enjoy reading these articles along with us and that you find them informative. Please forward this to your friends and family. J. Mark Nickell & Co. Disclosure – The articles mentioned in This Week with J. Mark Nickell & Co. are for information and educational purposes only. They represent a sample of the numerous articles that the firm reads each week to stay current on financial and economic topics. The articles are linked to websites separate from the J. Mark Nickell & Co. website. The opinions expressed in these articles are the opinions of the author and not J. Mark Nickell & Co. This is not an offer to buy or sell any security. J. Mark Nickell & Co. is under no obligation to update any of the information in these articles. We cannot attest to the accuracy of the data in the articles
