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Taper - Tastic

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http://www.cnbc.com/id/101277037

People are expecting the fed to begin tapering in the next three months, the earliest this could begin being today.

I haven't been following all the news but from what I've seen the US economic data that has been coming out has been booming so sooner is more likely.

Less QE should = higher IRs

Will they pull the trigger or kick the can?

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http://www.cnbc.com/id/101277037

People are expecting the fed to begin tapering in the next three months, the earliest this could begin being today.

I haven't been following all the news but from what I've seen the US economic data that has been coming out has been booming so sooner is more likely.

Less QE should = higher IRs

Will they pull the trigger or kick the can?

They can't taper, it kills everything, starting with the BRICS currencies.

This thing has to run it's course now, it's not going to be pretty.

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I don't think Bernanke wants to do anything do drastic on his last one

He might say the case for tapering is getting strong, or something like that (which in itself could have quite an impact), but overall my vote is for

67822.gif

That said, it would be no surprise to me if I am wrong...

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I don't think Bernanke wants to do anything do drastic on his last one

He might say the case for tapering is getting strong, or something like that (which in itself could have quite an impact), but overall my vote is for

67822.gif

That said, it would be no surprise to me if I am wrong...

Would be great if they started putting the brakes on. What would be the effect on the London market?

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Can you be more specific?

Simplification but ...

All the printed money, that unimaginably large amout of cash - where do you think it is?

In the BRICS, or a lot of it is.

When they taper, what will happen? It will return home in search of better returns.

The BRICs will then be stuck - do they push up rates to retain this money, and/or capital controls, and kill their markets(including property markets with all the effects on banks that we know so well) or do they allow devaluation and retail price inflation......

Tapering will kill the economy, not tapering will kill it more spectacularly and violently at some undetermined time in the future. What do you think the lovely people at the top are going to choose?

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Simplification but ...

All the printed money, that unimaginably large amout of cash - where do you think it is?

In the BRICS, or a lot of it is.

When they taper, what will happen? It will return home in search of better returns.

The BRICs will then be stuck - do they push up rates to retain this money, and/or capital controls, and kill their markets(including property markets with all the effects on banks that we know so well) or do they allow devaluation and retail price inflation......

Tapering will kill the economy, not tapering will kill it more spectacularly and violently at some undetermined time in the future. What do you think the lovely people at the top are going to choose?

Isn`t a lot of it also in UK/US equity markets and Prime US/London housing?

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I don't think Bernanke wants to do anything do drastic on his last one

He might say the case for tapering is getting strong, or something like that (which in itself could have quite an impact), but overall my vote is for

That said, it would be no surprise to me if I am wrong...

Tae per or not tae per

Edited by Killer Bunny

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"Beginning in January, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month."

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US 10-year yield initially spiked up, but is now at 2.88% (same as it was before the announcement).

Similarly the DJIA dropped on the news but is now up c. 130 points.

A volatile few minutes there!

There could be more to come when Bernanke speaks at 1930 UK

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Don't fall for it, the Fed's announcements about tapering QE is a monetary policy in itself. i.e. the announcement is the monetary policy without any action. Why?

Well if people believe the Fed are going to indefinitely keep on printing money the value of the dollar will fall.

The Fed has two main aims:

1. Funding the deficit by printing money and buying government debt. This allows the government to borrow money at low interest rates.

2. Keep the value of the dollar high.

So it has two opposing policies. It achieves 1 by printing money and buying government debt. It achieves 2 by announcing that it is just about to stop printing money. Job done.

The only way QE will taper is when the deficit tapers but there is not much chance of that and the Fed don't want people to know that this is the marker that will dictate when QE tapers. If they did admit this the value of the dollar would fall as people could see the deficit is not coming down. And the BoE are following exactly the same path.

Edited by JonathanR

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