I've been saying this for months now, but it's worth repeating - the Fed isn't tapering any time soon so let's stop worrying about that. In addition to the economic weakness that I've previously highlighted (muddle through GDP expectations at 2.5% in Q4, unemployment over 7%, inflation below the Fed's target, sagging corporate profits, a potential housing market drag in Q4, etc) we now have the Fed Chief transition.
I don't think there is a chance in hell that Bernanke would initiate a taper in the midst of a Fed Chief transition. He doesn't want to start tapering and then leave Janet Yellen with the public relations and market debacle that could likely unfold around all of this. That has the potential to be highly disruptive. My guess is that Ben Bernanke will quietly slip into the night leaving a hot steamy mess of QE behind so Janet Yellen can spend the next few years trying to figure out how best to clean it up.
Anyhow, I got sidetracked in my near disgusting metaphor there…John Hilsenrath of the WSJ says the same basic thing:
The Fed is unlikely to start curtailing its bond buying at its next policy meeting Oct. 29-30. Fed officials have said the decision depends on how the economic data evolve, but the data won't be very illuminating into November because the partial government shutdown closed the agencies that collect them.
"For those who really look at the data, it is going to basically delay thought of changing course," Richard Fisher, president of the Federal Reserve Bank of Dallas, said Thursday in an interview.
So, fear not. No taper, no tantrums. Okay?