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By Carlos Guillen

After a strong week of trading last week, this week is off to a great start and is beginning to show encouraging signs that perhaps equities will make further moves to the upside. One major cause for the strong gains in stock prices today is the news that Larry Summers has taken his name out of the running to head the Federal Reserve. Also assisting the market's upward momentum is the most recent agreement this weekend between the U.S. and Russia on a plan to get rid of Syria's chemical weapons.

Clearly, the main reason stocks are up strongly today is that investors are excited that Summers is no longer a runner up to replace Ben Bernanke. Mr. Summers, a former Treasury secretary and economic adviser to President Barack Obama, had been a critic of quantitative easing, and his nomination would have meant no more punch-bowl for Wall Street. Summers was viewed as more likely to tighten monetary policy than Janet Yellen, the current Fed vice chairman now considered the most likely person to replace Ben Bernanke as chairman of the Fed. Summers decided to remove himself as a candidate for the Fed Chairman position as Democrats on the Senate Banking Committee voiced opposition to his nomination, which had not been announced. This excitement over Summers' retreat comes just ahead of a two-day Fed meeting that begins tomorrow, with the central bank expected to start cutting its $85 billion in monthly bond purchases.

On a negative note, manufacturing expansion in the New York region slowed for a second consecutive month. According to the Federal Reserve Bank of New York, its general business conditions index September result landed at 6.3, lower than the Street's consensus estimate of 9.0, decreasing from the 8.2 reached in August. Given that readings greater than zero signal expansion, this month's result makes the fourth consecutive month of expansion after contracting back in May in the region that covers New York, northern New Jersey, and southern Connecticut. New orders for the region's manufacturers edged up two points to 2.4, while the shipments index surged fifteen points to 16.4, indicating that shipments picked up even as orders remained relatively flat.

On a more positive economic note today, industrial production rose in August by the most in five months, signaling U.S. manufacturing was improving into the third quarter of the year. According to the U.S. Federal Reserve, industrial production during August increased month-over-month by 0.4 percent, worse than the Street's consensus estimate calling for a 0.5 percent month-over-month rise. In the same time range, capacity utilization increased from 77.6 percent to 77.8 percent, landing in-line with the Street's consensus estimate of 77.8 percent. While it was feared that the slowing growth in China and the recession in Europe would have a significant negative effect here at home, it appears that the impact is not that severe.

How Much Difference Will the New Fed Chair Make Anyway?
By David Urani

The market today of course is buzzing about Larry Summers' withdrawal from the Fed Chairman running. That leaves Janet Yellen once again as the front-runner, and likewise she is seen as a potentially more dovish option. And so the markets are getting a boost on a possibly more accommodative future when Bernanke presumably leaves his post at the end of the year.

However, it might be prudent to pour a little bit of cold water on this all. First and foremost, Ben Bernanke is still the Fed Chairman and there are still three Fed meetings left before the end of the year; the first one starting tomorrow and ending Wednesday. The next one comes October 29-30, and the final meeting is December 17-18. There is still a high likelihood that some form of tapering begins at one of these meetings, if not this week.

Another point to add is that the Fed Chairman is the head of a 12-person voting committee consisting of the seven person Board Governors and the five regional bank leaders. Policy is still a democratic process and while Yellen, assuming she's elected, could sway the proceedings she would not be the be-all and end-all.

Another consideration is how different Summers would have really been anyway. He has a reputation for being outspoken and disagreeable, but as far as policy goes, it's arguable just how much more hawkish he would have been. In the meantime, comparing Yellen with existing Chairman Bernanke, you could say she may be largely similar to what we've already got.