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In other words, no one knows nuttin'! And we wanna see our lawyer!
That's the "standard" response, for ordinary folks. For politicians or financial types, it's either "I was not aware of that" or "I cannot recall at this time", or maybe even:
"I cannot recall at this time if I was in fact aware of that at that time, but it also depends on the meaning of "aware". It's possible that I may in fact have been aware in some context of that word, but did not realize that I was aware, if in fact I was."
Tapering is completely dependent on the strength or weakness of upcoming economic data. Since some believe the economy is much stronger than most perceive, that would mean sooner than later. Since the market is a perverse animal, the next leg up in stocks could well begin after tapering is announced. However, I would never base my investing on the what ifs of tapering.
Reply to @Old_Joe: After QE1 started, I said they weren't going to stop. Three or four QE's (What are we on now anyways? Is it QE Vista, QE 7 or QE 8 with no smart menu and useless apps?) later...
Never? Maybe not, but I think it is long enough away that people should not focus on it as much as they are on financial media and otherwise. As for a CD at the bank, you will get 4-5% again when the world looks like "The Jetsons", or at least the "Family Guy" version.
My guess is that someday they'll begin tapering QE while replacing it with some other kind of stimulus (what I have no idea) and that this will go on until a currency crisis occurs. But I warn you, my opinion isn't worth too much more than Alan Greenspan's.
Seems like commodities are looking kinda sloppy and gold too. I think they watch that stuff more than they want to admit. So, unless those prices reverse and head up, can't see any changes in FOMC policy. Than again - the other part of me wants to say: Everything will stop at exactly 2:37 AM in the morning on December 21:-)
bnath, you said in your last post you have been out of the market since 2008 because you have been afraid of having another loss like 2008. You also admitted that was a mistake. Trying to time when tapering ends and when we get the next correction, in my opinion, would just be another mistake.
I think you should look again at the suggestions given to you in your last post. Most suggestions were, in a nut shell, to DCA into lower risk, conservative type funds that fit your risk tolerance and goals. Specific fund suggestions were made along with suggesting that you check out Charles' Great Owl funds.
There will always be stories going on that will disrupt the markets. Tapering is one of many. You just have to decide how much you want to be invested in equities and form a plan to get there. There will be scary stuff going your whole life.
"Today the economy is significantly stronger and continues to improve. The private sector has created 7.8 million jobs since the post-crisis low for employment in 2010. Housing, which was at the center of the crisis, seems to have turned a corner--construction, home prices, and sales are up significantly. The auto industry has made an impressive comeback, with domestic production and sales back to near their pre-crisis levels.
"We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession. Unemployment is down from a peak of 10 percent, but at 7.3 percent in October, it is still too high, reflecting a labor market and economy performing far short of their potential. At the same time, inflation has been running below the Federal Reserve's goal of 2 percent and is expected to continue to do so for some time.
"For these reasons, the Federal Reserve is using its monetary policy tools to promote a more robust recovery. A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases. I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.
From Kenny Polcari earlier today; 'You see – The Fed, and other central banks, need to balance inflationary and deflationary risks when considering policies and it seems clear that they would rather risk inflation than deflation and the rate cut by the ECB last week only re-iterates this view. We only need to look at Japan to understand what 2 decades of deflation has done. And so the stimulus continues….' http://www.kennypolcari.com/2013/11/13/2575/
Another view of the world wide consequences of continued QE from MICHAEL CASEY'S HORIZONS.He makes some excellent points in a very global perspective!
"Inflationistas appear to have lost the debate: zero interest rates and trillions of dollars in money-printing have produced no realistic threat of global inflation.
But before those of us who foresaw the dominance of global deflationary forces start gloating, it’s worth taking a nuanced look at worldwide data. There we find that, while measures of consumer price inflation are indeed heading lower in Europe and North America, an uptick in the developing world is also discernible.
This contradiction could breed international tensions. It means that while the Federal Reserve and other advanced-country central banks are inclined to keep their foot on the gas, this monetary stimulus is the last thing emerging markets need. Contrary to the prevalent view that a Fed pullback will hurt these economies, they’d be best served by a tapering to bond-buying sooner rather than later." http://www.marketwatch.com/story/inflation-is-dead-not-everywhere-2013-11-13? link=mw_home_kiosk
And from Bill Gross via Seeking Alpha 4:48 PM
BOND Gross ups holdings of 3-5 year Treasurys Bill Gross is boosting his exposure to shorter-to-intermediate-dated Treasurys in what could be deemed a bet on the Fed tapering soon, but not hiking the Fed Funds rate for a long time. Treasury holdings at his Total Return Fund (ETF equivalent: BOND) have risen to 38% - the highest since the end of April - but the buying is focused on 3-5 paper, and Gross continues to be underweight the long end of the curve."Market expectations for rate increases are unlikely to be met," says Gross in his latest monthly report.Short-dated Treasury ETFs: SHY, SHV, BIL, VGSH, SCHO, DTUL, SST, TUZ, DTUSIntermediate-duration Treasury ETFs: IEF, PST, IEI, TYO, DTYS, UST, TBX, VGIT, GSY, DTYL, SCHR, TYD, ITE, FIVZ, TBZ, DFVL, DFVS, TYNSLong-duration Treasury ETFs: TBT, TLT, TMV, TBF, EDV, TTT, TMF, ZROZ, TLH, SBND, DLBS, VGLT, UBT, TLO, LBND, FSA, TYBS, TENZ, DLBL
The financial media has been confusing people by making it sound like the decision when to start tapering is a binary decision and that once the Fed starts they will have to continue tapering until QE goes to zero. With Yellen as the new Fed chairman that is not the case.
The tapering hasn't started yet, but even after it starts it can stop or even reverse. This guy from the FED says that if the economy weakens, QE may be increased and even exceed $85 billion a month.
Comments
That's the "standard" response, for ordinary folks. For politicians or financial types, it's either "I was not aware of that" or "I cannot recall at this time", or maybe even:
"I cannot recall at this time if I was in fact aware of that at that time, but it also depends on the meaning of "aware". It's possible that I may in fact have been aware in some context of that word, but did not realize that I was aware, if in fact I was."
thanks
Never? Maybe not, but I think it is long enough away that people should not focus on it as much as they are on financial media and otherwise. As for a CD at the bank, you will get 4-5% again when the world looks like "The Jetsons", or at least the "Family Guy" version.
I think you should look again at the suggestions given to you in your last post. Most suggestions were, in a nut shell, to DCA into lower risk, conservative type funds that fit your risk tolerance and goals. Specific fund suggestions were made along with suggesting that you check out Charles' Great Owl funds.
There will always be stories going on that will disrupt the markets. Tapering is one of many. You just have to decide how much you want to be invested in equities and form a plan to get there. There will be scary stuff going your whole life.
http://www.startribune.com/business/231677211.html
http://finance.yahoo.com/news/feds-yellen-opening-remarks-senate-banking-committee-hearing-213340475--finance.html
"Today the economy is significantly stronger and continues to improve. The private sector has created 7.8 million jobs since the post-crisis low for employment in 2010. Housing, which was at the center of the crisis, seems to have turned a corner--construction, home prices, and sales are up significantly. The auto industry has made an impressive comeback, with domestic production and sales back to near their pre-crisis levels.
"We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession. Unemployment is down from a peak of 10 percent, but at 7.3 percent in October, it is still too high, reflecting a labor market and economy performing far short of their potential. At the same time, inflation has been running below the Federal Reserve's goal of 2 percent and is expected to continue to do so for some time.
"For these reasons, the Federal Reserve is using its monetary policy tools to promote a more robust recovery. A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases. I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.
From Kenny Polcari earlier today;
'You see – The Fed, and other central banks, need to balance inflationary and deflationary risks when considering policies and it seems clear that they would rather risk inflation than deflation and the rate cut by the ECB last week only re-iterates this view. We only need to look at Japan to understand what 2 decades of deflation has done. And so the stimulus continues….'
http://www.kennypolcari.com/2013/11/13/2575/
Another view of the world wide consequences of continued QE from MICHAEL CASEY'S HORIZONS.He makes some excellent points in a very global perspective!
"Inflationistas appear to have lost the debate: zero interest rates and trillions of dollars in money-printing have produced no realistic threat of global inflation.
But before those of us who foresaw the dominance of global deflationary forces start gloating, it’s worth taking a nuanced look at worldwide data. There we find that, while measures of consumer price inflation are indeed heading lower in Europe and North America, an uptick in the developing world is also discernible.
This contradiction could breed international tensions. It means that while the Federal Reserve and other advanced-country central banks are inclined to keep their foot on the gas, this monetary stimulus is the last thing emerging markets need. Contrary to the prevalent view that a Fed pullback will hurt these economies, they’d be best served by a tapering to bond-buying sooner rather than later."
http://www.marketwatch.com/story/inflation-is-dead-not-everywhere-2013-11-13?
link=mw_home_kiosk
And from Bill Gross via Seeking Alpha 4:48 PM
BOND
Gross ups holdings of 3-5 year Treasurys
Bill Gross is boosting his exposure to shorter-to-intermediate-dated Treasurys in what could be deemed a bet on the Fed tapering soon, but not hiking the Fed Funds rate for a long time. Treasury holdings at his Total Return Fund (ETF equivalent: BOND) have risen to 38% - the highest since the end of April - but the buying is focused on 3-5 paper, and Gross continues to be underweight the long end of the curve."Market expectations for rate increases are unlikely to be met," says Gross in his latest monthly report.Short-dated Treasury ETFs: SHY, SHV, BIL, VGSH, SCHO, DTUL, SST, TUZ, DTUSIntermediate-duration Treasury ETFs: IEF, PST, IEI, TYO, DTYS, UST, TBX, VGIT, GSY, DTYL, SCHR, TYD, ITE, FIVZ, TBZ, DFVL, DFVS, TYNSLong-duration Treasury ETFs: TBT, TLT, TMV, TBF, EDV, TTT, TMF, ZROZ, TLH, SBND, DLBS, VGLT, UBT, TLO, LBND, FSA, TYBS, TENZ, DLBL
The jobs numbers don't mean "jack" at $10 or $12/hour without benefits. Three percent unemployment is available today; but without meaning.
http://www.reuters.com/article/2013/11/14/us-boeing-unionvote-idUSBRE9AD02120131114?feedType=RSS&feedName=businessNews
The tapering hasn't started yet, but even after it starts it can stop or even reverse. This guy from the FED says that if the economy weakens, QE may be increased and even exceed $85 billion a month.
http://www.bloomberg.com/news/2013-05-23/williams-says-fed-could-increase-pace-of-qe-again-after-tapering.html
The initial taper decision is just one data point and really means very little.