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Overall- I’m still bullish and think the reaction was a little exaggerated.

The big takeaway is that “good” economic data might not be “good” for the Wall Street because that would imply a rate hike might occur sooner than initially expected. Of course, it is still early and the Fed needs to “see” more data before making any material changes to their forward guidance.

Yesterday Janet Yellen held her first press conference as Fed Chair. She handled it quite well considering it was her first time at bat and it is not an easy task. As you know by now, the one mistake was her 6-month comment. Why was it a mistake you ask- especially because it was “in-line” with prior guidance? Investors were largely expecting it to be a little longer than 6-months. Remember that could change – depending on the data but right now- perception is reality.

My takeaway from her comments is that the Fed will continue to do everything in its power to support both Main Street and Wall Street. I highly doubt they are going to step back and let Main Street fall off another economic cliff if conditions worsen. Deep down, investors know this and that is why we saw the stock market rebound after the initial sell-off in the few minutes following her comment.

Short Term Outlook:

In the short term it will be very interesting to see where we close tomorrow and then where we close for the month and quarter. As of Wednesday’s close, the S&P 500 is up 12 points for the quarter and the year which is not a lot but healthy considering how strong it rallied last year.

Perception is Reality On Wall Street

Keep in mind, the only thing that matters in this business is what is actually happening (not what someone thinks should happen). So the fact that various markets around the world reacted the way they did implies that large investors were caught off guard (and or not pleased) by her comment. As always, perception is reality on Wall Street. This reinforces a lesson I learned many, many, years ago: How markets react to the news is a lot more important than the news itself.