Fed Chair nominee Janet Yellen will have the daunting task of winding down Fed stimulus without causing the equity markets to collapse

Fed Chair nominee Janet Yellen will have the daunting task of winding down Fed stimulus without causing the equity markets to collapse. In fact, one of the first decisions Yellen will have to make as Bernanke's successor is when and how much to reduce bond purchases. Presumably some time in 2014, the economy will show enough growth (or reduction in unemployment) for the Fed to begin to unwind its massive balance sheet. Unfortunately for Yellen, the markets appear to be addicted to Fed stimulus. It's actually kind of ironic if you think about it - it's very difficult to quantify the benefits of central bank bond buying. It's really more of a confidence booster than anything. As such, Yellen will need to find a way to keep investor confidence high while at the same time weaning the markets off of Fed stimulus.