It seems that, lately, whenever I start discussing possible Fed actions, the conversation veers more toward what they wouldn't do, rather than what they might do.
"I would be shocked if there was discussion of a firming of the economy," says Andrew Wilkinson, Chief Economic Strategist at Miller Tabak & Co., in the attached video. "You can't rule it [some form of easing] out, but I don't expect it today."
That's not to say that he doesn't expect it eventually, or that he thinks further stimulus isn't needed, because he does. In fact, Wilkinson is of the mind that the mini-recovery we enjoyed for much of the past six months appears to have "plateaued" and that the Fed has really been left with two choices.
"You can have either 1.5% growth that's going to be the new normal, or we'll see 3% if the Fed keeps up with its policy of quantitative easing."
As much as investors have been trying to get a jump on the next round of stimulus by bidding up stocks and bonds on every morsel of bad news (the belief being that weakness only solidifies the case for QE3), Wilkinson has been actively calling for it since mid-January and is targeting that the S&P 500 will jump to 1450 by June.
"That's predicated on one of two things: either further quantitative stimulus or the economy gets enough of a head of steam to warrant a 3% pace of growth on its own," he says.
In the meantime, he welcomes the Fed's newly implemented transparency efforts and all the individual data points from FOMC members that come with it. But when push comes to shove, he says the words of Chairman Bernanke will dictate the day.
"Without a shadow of a doubt [the most important piece] is going to be how Bernanke addresses the crowd at 2:15 (pm/et)," he says, in reference to Bernanke's quarterly press conference. "He's only one voice, but he's the most important voice."
