Chairman Bernanke may have made a good-faith effort to provide greater clarity on the future of the bond-buying program. On the other hand, he must know that the economy is not likely to improve on its own. Corporate revenue has been shrinking, manufacturing growth has been struggling, labor force participation is straddling 34-year lows and consumers have less disposable income.
With a seemingly endless recession in Europe and a troubling slowdown in China, as well as a "wealth effect" that is likely to diminish alongside higher 10-year yields, it is difficult to imagine that the Fed views the economy as near sustaining itself.
If it sounds like I am calling for an end to a bull market for stocks, I am not. My expectation is that economic data over the coming months will be poor. Additionally, corporate guidance for future revenue and earnings will be disappointing. It follows that the Fed will ultimately be forced to put its
plan for tapering on hold
Need more proof? The Fed has inflation targets as well as employment targets. The present course of inflation-protected securities is showing a greater fear of deflation over inflation. Specifically, the
iShares TIPS Bond Fund
is falling rapidly relative to the
iShares 7-10 Year Treasury Bond Fund
. The Fed is extremely unlikely to abandon bond buying with deflation taking root.
In essence, this is the moment to prepare your "wish list." What ETFs do you wish you would have acquired back in November/December... back when the Fed first discussed buying $85 billion per month in government and quasi-government bonds?
PowerShares Small Cap Health Care
iShares DJ Aerospace
UBS E-TRACS Alerian MLP
Guggenheim S&P Small Cap Value
Market Vectors Retail
all merit consideration; each has an element of built-in defense for economic and/or rate uncertainty; RTH has 50% in consumer non-cyclicals (staples).
This article was written by an independent contributor, separate from TheStreet's regular news coverage.