Bernanke said Wednesday that economic expansion was sufficient enough for the Federal Reserve to consider tapering back the bond buying stimulus over time.

This should be good news!  The market always overreacts and we see this as an opportunity and not a reason to make irrational decisions.

In the last few days we have seen economic figures such as Retail Sales come in at twice what was expected, the homebuilder’s index the highest it had been in seven years, and re-sales of U.S. Homes rose in May to the highest level in 3 ½ years and prices rose.  Not to mention forward looking S&P500 earnings expectations are moving further into record territory.

Bond market yields are hitting 52 week highs with the 10yr Treasury currently trading at 2.42%.  With the interest rate risk in the bond market, it is likely that some of that capital will find its way to the equity market.  This will add to the liquidity available to the stock market above and beyond what are already historical levels of sideline cash.

Again, it should be good news that the Fed does not think we need the level of stimulus that has been recently employed.  The expectation that U.S. Gross Domestic Product (GDP) is expected to accelerate the balance of 2013 and into next year is positive.  The fundamentals remain strong and we remain bullish intermediate and longer term.