I like to worn the little guy to keep out of the market and let the sharks eat each other! Greed is interesting and the little guy might think, good god, I got to get back into the game......Ha just crazy to watch the FED fuel and the cheer leaders climb on board!
gee whiss mason, so clever you are. You use one id to bash the bank, and then another to bash the basher, the reason? to make us think yu are two different people. But the fact remains and is clearly known you are one very sick individual
The Effect Of Fed Tapering On The Economy, The Housing Market And Stocks
The Fed met yesterday afternoon to discuss the state of the economy and decide if they would begin the process of tapering (i.e.; reducing its $85 billion per month asset purchase program). After a brief meeting, they decided to wait. Although a number of individuals were fully convinced the Fed would begin to taper this month, I have consistently written that the Fed would not begin tapering in September.
Why? Primarily because the U.S. economy remains weak and there are a few potentially significant risks in doing so. Of course, the time will come when the Fed will begin to reduce its asset purchases. How will this impact the financial markets? Perhaps more important, have the financial markets become so accustomed to the Feds easy money policy that the addiction is deeply ingrained? In other words, has the stock market consumed so much punch that the withdrawals will be severe?
It seems reasonable to assume that the actual process of tapering will be slow and gradual with the goal of minimizing any potential market disruptions. This is precisely where the difficulty resides. After all, everyone understands that the Fed cannot continue expanding the money supply at the current rate. Therefore, the key issue is to taper with the least amount of market disruption. I suspect this will include sending up trial balloons to gauge the market’s reaction to various Fed actions, executing the tapering process, and having contingency plans in place to address any significant issues which may arise. In short, it will require a thorough PR campaign, but with much higher stakes.
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Tapering And Higher Interest Rates
Most believe that tapering will result in an increase in interest rates, especially at the longer end of the yield curve. This could have two detrimental effects. The first would be higher mortgage rates. In this scenario, the housing recovery which is critical to a thriving economy, could slow drastically. Therefore, tapering at the present time would be risky. Another issue has to do with the federal budget. If tapering does indeed lead to higher interest rates, the increased cost to the federal budget would be a considerable impediment to fiscal policy health. I heard an interesting statistic recently that said that if interest rates were to rise by one percentage point, it would completely erase the budget savings created from the sequester.
Remember the sequester? If Congress didn’t come to an agreement on the budget by a specified date, automatic budget cuts would ensue. Well, Congress did not and budget cuts were implemented. Again, a one percent rise in interest rates could effectively wipe this out.
Some speculate that any delay on the part of the Fed may be politically motivated as it would help the incumbent party by keeping interest rates low. Only a few people actually know the truth. The rest of us are left to speculate. Personally, I view this issue as one which affects the entire nation not just one political party. Sure, if the Fed did taper, and interest rates rose, and the housing market recovery stalled, and the federal government deficit and debt spiked, at election time, the Republicans would surely have all fingers pointed at the Democrats, and they may even gain seats in Congress.
However, if they couldn’t pull off a victory in the last presidential election when the unemployment rate was at 8.2%, and given the fact that Obama was the first incumbent to be reelected when the unemployment rate was above 8.0% in the modern era, I’m not terribly confident that the Republicans would actually benefit.
No I meant $5 - $7 as the debt gets sorted out! Wait and see, the FED can't keep buying the Treasury auctions every month and stuffing it under the rug! Tipping point is coming soon! Watch the Asian markets for the first whiffs of inflationary pressures.
Andy, there will NEVER be any FED tapering. They can't do it now, and they'll never be able to do it. The apple cart will crash with ever-greater QE still being applied. ROTFLMAO just don't call it a Ponzi.....
With today's job report tapering should be eased back soon. I don't think that will benefit the big banks. Although I believe BAC will be ok since it is already undervalued currently
FED QE has skewed the market evaluations on all stocks. You have to pay the piper at some point and in my humble opinion that time is rapidly approaching. Historically speaking any and all massive QE's have been met with hyper-inflation.