The purchasing-manager survey and regional survey by the Fed look good. I could see the unemployment rate falling to 7% in February. They would have that data for the March meeting. If the market is a lot higher, they will really have to start tapering. Yellen has a real job ahead of her in exiting from this period of ultra-easy policy. I don't think it's in her DNA to walk away from ultra-easy policy. If she is forced to start tapering by events like a lower unemployment rate and a stronger stock market with elements of a bubble, she'll make it clear that the Yellen-led Fed will keep fed funds near zero for quite some time. So the problem with a melt-up is it really creates a mess for monetary policy and forces the Fed to react in such a way that it will lead to a significant correction in the spring. I would put 30% odds on that.
---Ed Yardini, Barrons