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On The Taper Timing, It's The WSJ vs The NYT

Tyler Durden's picture





 

Just out from the NYT's Fed watcher Appelbaum:

Fed’s Plan to Taper Stimulus Effort Not Expected Until Next Year

 

Federal Reserve officials are in no hurry to retreat from their bond-buying campaign to stimulate the economy and are likely to postpone any cuts to the program until next year, according to public statements by Fed officials and interviews with some of them.

 

Job growth has strengthened in recent months, and Fed officials expect continued improvement in the coming year. The Fed’s chairman, Ben S. Bernanke, predicted in June that the Fed would taper its purchases by the end of this year, and officials say they still could announce such a cut next week, when the Fed’s policy-making committee is scheduled to hold its final meeting of the year.

 

But influential Fed officials see little harm in postponing the decision, particularly compared with the risks of pulling back too soon...

At the same time, out from the WSJ's Hilsenrath:

Fed Closes In On Winding Down Bond Purchasing

 

Federal Reserve officials are closer to winding down their controversial $85 billion-a-month bond-purchase program, possibly as early as December, in the wake of Friday's encouraging jobs report.

 

Fed Chairman Ben Bernanke will have to build consensus among officials about how soon to pull back on a program that has been the center of market attention for months and whose effectiveness isn't wholly clear. Many are getting more comfortable with starting a delicate process of winding the program down, though disagreements about timing and strategy could emerge, according to public comments and interviews with officials.

 

The Fed's next policy meeting is Dec. 17-18 and a pullback, or tapering, is on the table, though some might want to wait until January or even later to see signs the recent strength in economic growth and hiring will be sustained. On Tuesday, officials go into a "blackout" period in which they stop speaking publicly and begin behind-the-scenes negotiations about what to do at the policy gathering.

 

One important consideration: Are investors prepared for a move? Talk of pulling back earlier this year jarred stock and credit markets. On Friday they seemed to take the prospect of a pullback in stride.

Who is right? Are both right? Are both wrong? According to some, especially those who manage other people's money, and are paid only if the multiple expansion myth continues, any news will be good news, and all bad news is priced in.

Scott Minerd, global chief investment officer for Guggenheim Partners LLC, said, "It doesn't matter" whether the Fed makes a decision on tapering this month or in 2014. "It's priced in," he said.

Sure, nothing matters, and the Taper - that tiny reduction in flow by $10 billion from $85 billion to $75 billion - was priced in in May also, until the Emerging Market nearly suffered a cardiac attack and the US bond market imploded...

Then again, does anyone even care? Far more relevant is what is the Fed's price target for the Monday and year end close.

Also, how sad is it that this is what financial journalism has devolved to: when will the economist PhD overlords decree to (minimally) reduce their central-planning of the US economy and capital markets (and yes, Stalin must be spinning in his grave...)?

All completely meaningless questions to distract the population from the fact that while the markets rise to ever higher record highs, the social fabric in the US and globally stretches ever thinner...

 


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Sun, 12/08/2013 - 22:40 | Link to Comment NoDebt
NoDebt's picture

When it happens, IF it happens, my first comment is already pre-planned:  let's see them make it stick more than 6 months.

Sun, 12/08/2013 - 23:15 | Link to Comment SilverIsKing
SilverIsKing's picture

When it happens, if it happens...

Good one. Comedic genius.

Mon, 12/09/2013 - 01:17 | Link to Comment AlaricBalth
AlaricBalth's picture

The sole purpose of Quantitative Easing has been to inflate and support asset prices until the "real" economy recovered enough to justify the various paper asset valuations. The Fed will not taper because the economy, despite recent official metrics that state otherwise, has not obtained a self sustaining equilibrium.

In addition, the US economy is not the Feds only concern. It has assumed the responsibility of being the de facto global central bank, which is a theory that has been proven through various Fed bailouts of insolvent foreign banks. To taper now would plunge the economies of the western world deeper into the depression from which they are trying, almost vainly, to climb out of.

Mon, 12/09/2013 - 01:36 | Link to Comment Obchelli
Obchelli's picture

How this morons keep saying that bad news are priced in when market retraced all drop from taper talk and then added some marching near 52 week high... WTF is priced in? Optimism and total euphorea that nothing will ever happen

Mon, 12/09/2013 - 02:13 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

In other news, chocolate ration is increase from 5g per day to 20g per week. War between Oceania and Eurasia is rage on.

Mon, 12/09/2013 - 02:42 | Link to Comment Obchelli
Obchelli's picture

Boris,

 

They started mixin salo into chocolate (10g/10g). It's realy hard to eat;

Mon, 12/09/2013 - 03:35 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

But now not so blockage in colon:)

Mon, 12/09/2013 - 06:04 | Link to Comment Occident Mortal
Occident Mortal's picture

I think they will taper very soon, the reason being that the yield curve is now steep enough for them to taper.

 

Does anyone here understand QE?

First they bought all the near end so that they could provide liquidity, then they twisted into the long end, which flattened the curve and really hurt the recovery, now they are going to exit from the long end, thus manufacturing a steep curve.

They will hold the near end of the curve low whilst exiting from the long dated stuff. The curve is going to get very steep, maybe 5% steep. This is what they want, a steep curve.

The only thing left for discussion is will the belly be low or high? Should I take 5yr money?

The sheer volume of UST they own means that they can keep the curve steep for a long long time. Selling 20's and 30's and fixing the 3 month at 0.25%. The Fed don't want to own 100% of the Treasury market, the Fed want a nice steep yield curve. Forever.

Why do so many people here believe the Fed is determined to pursue policy that will precipitate it's own destruction and the destruction of the financial system?

Killing the golden goose is not their goal.

Mon, 12/09/2013 - 06:52 | Link to Comment Peter Pan
Peter Pan's picture

Interesting perspective OM. But can they fix the 3 month stuff at 0.25%? Or is the whole market going to turn into short dated debt eventually? Tell me more?

Mon, 12/09/2013 - 07:27 | Link to Comment Occident Mortal
Occident Mortal's picture

Spread between 2yr and 20yr

 

May….2.24%

Sept…3.11%

Dec….3.33%

 

Spread between 3 yr and 30yr

 

May….2.53%

Sept…2.96%

Dec….3.26%

 

The curve is now circa 25bps steeper than it was in September. Their primary indicator (the yield curve) has significantly improved since September.

 

 

They will taper very soon.

 

What's interesting is that the spread has moved deeper into the curve. They have created a vacuum for an economic expansion, with huge inflation expectations sitting 3 years out in the curve.

Mon, 12/09/2013 - 11:42 | Link to Comment Bay of Pigs
Bay of Pigs's picture

So how does the gov't continue to fund massive deficits in a deteriorating economy? Or is the debt ceiling meaningless now too?

Mon, 12/09/2013 - 13:12 | Link to Comment Occident Mortal
Occident Mortal's picture

That's just it though. The deficit is contracting sharply.

Expected to be

$576bn by 2015
From
$972bn in 2013

http://m.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/his...

Mon, 12/09/2013 - 06:54 | Link to Comment caribbeanbarry
caribbeanbarry's picture

It's the brass and lead Geese that will be killed....

Mon, 12/09/2013 - 09:24 | Link to Comment Obadiah
Obadiah's picture

through inflation then deflation of the paper the banks aim to own the entire world, when they are ready to buy up real assets they will "pull it"

Mon, 12/09/2013 - 01:24 | Link to Comment Obchelli
Obchelli's picture

There will be no Taper...

Ever...

Why would they Taper?

Everything works out great for "them" and if something goes wrong they will just increase QE...

Some try to argue that market will force them manana... But will it? Why it didn't already?

Mon, 12/09/2013 - 02:19 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

If QE is unjustly enrich Bankster Class by dilute overall share value while increase number of share held by banker, then taper is reverse. If Bankster class is get away with not is but one, but two and three QE, then it is such obvious boiled frog citizenry is not a) aware or b) vigilant oppose QE. Bankster is not stupid, not honest, not care about citizenry. What is motivation to taper, only motivation to talk about taper.

Mon, 12/09/2013 - 08:47 | Link to Comment Bangin7GramRocks
Bangin7GramRocks's picture

$100,000 reduction per month sounds about right. The dumb fucking robots will selloff anyway. They just need the stock markets to slow down. It is bad for business when regular folk start understanding the con.

Mon, 12/09/2013 - 07:55 | Link to Comment Jumbotron
Jumbotron's picture

Simple question......deserves a simple answer.

Until the Ponzi is destroyed or fixed it is QEternity.

Next.....

Sun, 12/08/2013 - 22:42 | Link to Comment stant
stant's picture

bs they wont stop untill the market makes them

Sun, 12/08/2013 - 22:49 | Link to Comment intotheblack
intotheblack's picture

Thought markets had been abolished. Too unruly. Inefficient. Outcomes inconsistent with political goals.

Mon, 12/09/2013 - 00:11 | Link to Comment Stoploss
Stoploss's picture

lemme in here so i can piss all over Hilsey's headline.

http://research.stlouisfed.org/fred2/series/MZMV

NO TAPER..........

Mon, 12/09/2013 - 08:47 | Link to Comment Bangin7GramRocks
Bangin7GramRocks's picture

Market? What year are you from time traveler? The FED and the robots are the market in 2013.

Sun, 12/08/2013 - 22:44 | Link to Comment williambanzai7
williambanzai7's picture

HOLIDAY PUKE II

Sun, 12/08/2013 - 22:59 | Link to Comment LetThemEatRand
LetThemEatRand's picture

A holiday classic.  Mr. Kissinger's bitch goes to Washington.

Sun, 12/08/2013 - 23:27 | Link to Comment frankTHE COIN
frankTHE COIN's picture

With his head angled like that he looks a lot like Il Duce.

Sun, 12/08/2013 - 22:46 | Link to Comment intotheblack
intotheblack's picture

So exciting. Which organ of state propaganda predicts with precision the operations of the central planners? Like Kremlinology only murkier. Taper on. Taper off. Is there a third option?

Sun, 12/08/2013 - 22:54 | Link to Comment NoDebt
NoDebt's picture

Yes.  Negative taper.  (Increase in QE)

Mon, 12/09/2013 - 05:51 | Link to Comment Rubbish
Rubbish's picture

Remind me, who is going to buy our debt?

Sun, 12/08/2013 - 22:58 | Link to Comment AlaricBalth
AlaricBalth's picture

Tass or Pravda.
Choose your propagandizing journalistic poison.

Sun, 12/08/2013 - 23:23 | Link to Comment Ryan7
Ryan7's picture

bubble on and bubble off...

Mon, 12/09/2013 - 05:06 | Link to Comment monkeyshine
monkeyshine's picture

LOL Exactly each paper is a mouthpiece for a different leaker with his/her own agenda.  fwiw I think they will wait to see holiday sales numbers before announcing anything.

Sun, 12/08/2013 - 22:51 | Link to Comment A Lunatic
A Lunatic's picture

No Taper until after the Elections. Which elections? Who knows........

Sun, 12/08/2013 - 22:54 | Link to Comment Uber Vandal
Uber Vandal's picture

Here is the "success" that Japan had with their taper, ca. 2006.

http://www.businessinsider.com/chart-of-the-day-japans-experience-with-t...

A nice look at Japanese interest rates (no higher than 1/2 of 1% since 1995)

http://www.tradingeconomics.com/japan/interest-rate

Furthermore, anytime the Fed mentions Taper, simply refer to this classic short clip:

https://www.youtube.com/watch?v=MmFfTJlIvhQ

Sun, 12/08/2013 - 22:54 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

A head-fake is a tactic also.
Just ask OJ.

Sun, 12/08/2013 - 22:55 | Link to Comment NOZZLE
NOZZLE's picture

Probably be better off learning how to repair outboard/inboard motors for all of the newly minted demi millioniares.

Mon, 12/09/2013 - 06:49 | Link to Comment caribbeanbarry
caribbeanbarry's picture

Done that! Yacht Captain available....

Sun, 12/08/2013 - 23:13 | Link to Comment q99x2
q99x2's picture

They are enemies of the world. May they commit suicide during the Holiday Season. I don't want to hear any more about this crap. It is meaningless and stirs up anger.

Sun, 12/08/2013 - 23:16 | Link to Comment frankTHE COIN
frankTHE COIN's picture

I played that Whole Tape backwards like A 45 vinyl record. I was frightened by what I heard.

Sun, 12/08/2013 - 23:19 | Link to Comment holdbuysell
holdbuysell's picture

Watch what they do, not what they say...including the MSM.

Jawboning is losing its 'muchness'.

Sun, 12/08/2013 - 23:28 | Link to Comment dirtyfiles
dirtyfiles's picture

in today's advanced world economics which major should one have to know when one will taper or one will taper not ?

to be or not to be to the investing world ....unbelievable

Sun, 12/08/2013 - 23:25 | Link to Comment Bay of Pigs
Bay of Pigs's picture

What does Dick Fisher say? He's the Hawk after all...

Sun, 12/08/2013 - 23:33 | Link to Comment bubblemania
bubblemania's picture

Yellen made it very clear during her performance with the banking committee that stimulus will not be removed prematurely. FOMC will say something like the policies are working and they need to see more data that growth is sustainable before easing up on asset purchases. Ben will say that taper will be considered in the next few meetings and will be data dependent. There are continued risks and the recovery is to fragile to remove any stimulus. Chinese will likely reduce or stop altogether buying treasuries. If Mrs. Wantanabe doesn't come to the rescue forget about tapering treasuries anytime soon. MBS will go first.   

Mon, 12/09/2013 - 00:22 | Link to Comment Imminent Crucible
Imminent Crucible's picture

"Chinese will likely reduce or stop altogether buying treasuries"

It looks like that decision has already been made:

http://www.presstv.ir/detail/2013/12/01/337686/china-plan-to-quit-dollar...

Mon, 12/09/2013 - 01:23 | Link to Comment Caveman93
Caveman93's picture

Well it's about damn time! Let WWIII begin!

Sun, 12/08/2013 - 23:54 | Link to Comment Fred Hayek
Fred Hayek's picture

The default presumption with these entities, that they're both wrong, is pretty hard to resist, isn't it?

Mon, 12/09/2013 - 00:10 | Link to Comment CounterPartyVice
CounterPartyVice's picture

Misleading statement about tapering have become the de facto policy for the reason that they can't taper and may actually have to increase QE. So now lying and fudging the numbers is perfectly acceptable in the name of "financial stability". Yellen = ctrl-p

Mon, 12/09/2013 - 00:11 | Link to Comment pragmatic hobo
pragmatic hobo's picture

taper will happen when the banks have shorted the market and the joe public have shifted their 401k into stocks.

Mon, 12/09/2013 - 00:53 | Link to Comment jonjon831983
jonjon831983's picture

Maybe they'd be both right if... they tapered bond purchases and went all in on stawks

Mon, 12/09/2013 - 00:56 | Link to Comment Teddy Tenpole
Teddy Tenpole's picture

 

 

I gots me money on The Rat.

Mon, 12/09/2013 - 01:14 | Link to Comment Clowns on Acid
Clowns on Acid's picture

Waiting for taper is like Waiting for Godot. He's coming don't worry....... 

 

Mon, 12/09/2013 - 01:20 | Link to Comment Caveman93
Caveman93's picture

Taper what? No thanks, they won't ever taper until it's dead. If they intended to taper at some point why did they start pumping to begin with? Blackhole from hell my friends.

Mon, 12/09/2013 - 04:05 | Link to Comment ebworthen
ebworthen's picture

Go ahead FED, taper.

End all QE, end every last cent of it.

If you aren't propping the equity casino completely and the "recovery" and "employment" are really here...END QE YOU FUCKING PUSSY'S!

But...you won't...will you? 

You will continue the same sad game you have been playing for DECADES, won't you?

You worthless, gutless, soul-less coven of WITCHES and WARLOCKS!!!

Will you "taper"?  Go on!  I dare you!!! I double-dog dare you!!!

Fucking lying sacks of worthless SHIT!!!

DO IT ALREADY YOU SATAN SPAWN!!!

Mon, 12/09/2013 - 02:02 | Link to Comment Peter Pan
Peter Pan's picture

The question is not whether they will taper but whether they instead decide to balloon.

 

Mon, 12/09/2013 - 04:25 | Link to Comment Oink1689
Oink1689's picture

Mon, 12/09/2013 - 04:25 | Link to Comment Oink1689
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Mon, 12/09/2013 - 05:20 | Link to Comment fijisailor
fijisailor's picture

I guess someone is gullible and believing this msm taper talk.  It will not happen now or later voluntarily.  Only a dollar crisis can cause it.  QE until muppets believe the financial statistic lies?

Mon, 12/09/2013 - 07:07 | Link to Comment fijisailor
fijisailor's picture

This is real desparation.  When QE isn't working and tapering can't happen the only thing left to do is talk about tapering.  A crash and QE to the moon are in the cards real soon.

Mon, 12/09/2013 - 07:39 | Link to Comment buzzsaw99
buzzsaw99's picture

they will taper long enough for jpm and the squid to load up on bonds then untaper again for some bonus inducing dumpage back to the fed bitchez. the banks are riding this country like a harley on a bad stretch of road.

Mon, 12/09/2013 - 08:26 | Link to Comment Laughinggrizzley
Laughinggrizzley's picture

Does anybody think these clowns will taper and crash the greatest bubble of all the time, the Bond market? And thus adding several trillions of interest payment on to the US deficits? It is almost comical to think that this Keysian cluster fuck will end anytime soon. (Until someone at JPM or GS have shorted any market and can make trillions and trillions...)

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