It looked like the Fed was going to get hawkish last month but with controlled inflation and recent comments by Chariman Bernanke and Janet Yellen, you have to beleive that the Fed tightening is further out in the future.
Yellen states there are five indicators that form the Fed dashboard for labor markets. If these number do not look positive, the Fed easing will continue.
1. The unemployment rate - This number is still and while it has seen a steady fall, it is unlikely to hit anything near 6% in the next 18 months.
2. the pace of payroll employment growth - That number is starting to grow but still not able to reach above 200,000 per month on a consistent basis.
3. The hiring rate - This numbeer is sitll depressed at around 3.2% when it should be strongly above 3.6%
4. The job quitting rate - You will only quit a job if you believe you can get a new job. This is not happening.
5. Overall spending and growth - This has fallen to about 2% which is not verys strong versus the ten years before the crisis when grwoth was averaging above 3%.
While the economy is doing better, by the Yellen measures there is still room for strong QE by the Fed. Buy stocks because the easing will continue.
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