The Fed just announced that it will roll over its mortgage security investments. This is a sign that the "doves" are gaining control at the Fed. This is a very bullish development and probably reflects the two most recent appointment to the Board.
In my opinion it is critical that the Fed convince the market that it will NOT shrink its balance sheet and NOT reverse the quantitative easing steps it took during 2008 and 2009. Why? Employment and corporate investment depends almost entirely on expectations for GDP growth. These growth expectations in turn depend almost entirely on expected tax rates and upon the expected growth of the Fed's balance sheet. Tax rates are still expected to go up (although the November elections may change the situation dramatically). But this afternoon's announcement by the Fed shows that it is changing its mind about its previously announced plan to shrink its balance sheet. This is a change for the better as far as expectations for economic growth go.
This is a very bullish development for the U.S. economy.