From Dow Theory Letters, September 21, 2016:
“Good news today from both the Fed and the Bank of Japan (BOJ). The Fed announced no rate increases for now, though hinted (or teased, to be honest) that one would come later in the year. In Japan, the BOJ said it would continue an easy monetary policy even after inflation hits their 2% target.
“Stocks, precious metals, and oil all scored good gains as a result of this and other positive news, such as a decline in US crude oil inventories. Bonds waddled around, closing slightly lower in terms of Treasury notes and bonds. The US dollar fell 0.47%.
“Oil was up a buck and a half, gold gained $20, silver added a huge 63 cents, and platinum rallied $26. XAU zoomed 7% higher, once again closing in on the 100 mark.
“In stocks, the Global Dow rose 1.37%. The Dow Industrials added 164 points, Nasdaq 54, and the S&P 23 large points.”
As I’ve said before, the Fed is driving the markets. Perhaps more accurately, central banks are driving the markets.
Had Yellen, in her press conference following the FOMC meeting, made any serious hawkish statements about raising rates in December (or November), the markets would not have had surge upside moves. Investors expect loose money to continue, and rightfully so considering the Bank of Japan taking the position that it will continue “easy monetary policy even after inflation hits 2%.”