Welcome to “Bernanke Swan Song Week.” As the Fed chief prepares his exit some wonder what, if any, final mark he may leave on his legacy at this week’s meeting. Barring a highly unlikely surprise move of some sort, the question boils down to whether or not the FOMC increases the taper they announced in December or simply stays the current course.
“The only reason they may have to not taper is because of the unemployment report we had in January,” says iiTrader.com’s senior market strategist Bill Baruch. He believes that December’s jobs report is an unfair judge of the economy’s character. “The amount of days they had to hire were really cut in half,” he argues citing the holidays and snowy weather.
Baruch therefore thinks Bernanke and crew continue the tapering they launched last year. “It shows they do have confidence in the market,” he argues adding that the meeting and results of it could spark a further rally to 2,000 on the S&P 500.
Still, even is the result of this week’s meeting is a pause to the taper, Baruch says that might not be a bad thing for stocks in the longer term. “If they don’t taper they’re still pumping money into the market,” he says, “and that’s a reason to buy the dip.”
So what is it that could keep the S&P 500 from hitting that next big round number?
“The only thing that could hurt this market,” Baruch says, “is to start a trend of poor jobs reports.”
So while Bernanke takes his final bow the real indicator will come nine days later when the Labor Department releases January’s jobs figure.