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Tales From The Future. I picked my nickname because many advisors and investors claim they can predict the future of the (stock) markets and somehow pick the winners. I don't. I usually do not engage in short-term trading and myopic analysis (quarter by quarter, without looking at the big... More
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  • Fun: What Ben Bernanke Didn't Really Say... 2 comments
    Jan 19, 2014 7:32 PM | about stocks: SPY

    Hmmmm, how will we ever get out of this QE mess again?

    I guess I will leave that for the lady next to me to resolve. I'm out at $4 trillion.

    (click to enlarge)

    On a more serious note, many skeptical FED watchers still don't believe a rapid taper is really coming along as planned...

    Bernanke said the FOMC at each of its subsequent meetings will conduct further $10 billion decreases until QE comes to an end. Most Wall Street experts took him at his word and anticipate the liquidity injections to be history once 2014 is in the books.

    The minutes, though, reflect no such certainty. They indicate quite the contrary, in fact, when relating the discussion over how the Fed would proceed with tapering

    ... (and later regarding interest rates)

    the Fed is unlikely to raise rates even if unemployment falls below 6.5 percent. The falling jobless number, at any rate, is largely the result of a reduction in labor participation than it is robust employment growth, as evidenced by December's paltry 74,000 gain that coincided with a 0.3 percentage point unemployment rate decline.

    www.cnbc.com/id/101344773

    Themes: fed, monetary policy Stocks: SPY
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  • Tales From The Future
    , contributor
    Comments (5666) | Send Message
     
    Author’s reply » "Our currency, your problem" repeated once again in FX versus the USD:

     

    "The worst selloff in emerging-market currencies in five years is beginning to reveal the extent of the fallout from the Federal Reserve’s tapering of monetary stimulus, compounded by growing political and financial instability.

     

    The Turkish lira plunged to a record, while Ukraine’s hryvnia sank to a four-year low and South Africa’s rand fell to the weakest level since October 2008, after tumbling yesterday beyond 11 per dollar for the first time since 2008. Argentine policy makers devalued the peso by reducing support in the foreign-exchange market, allowing it to drop the most in 12 years to an unprecedented low.

     

    Investors are losing confidence in some of the biggest developing nations, extending the currency-market rout triggered last year when the Fed first signaled it would scale back stimulus. While Brazil, Russia, India, China and South Africa were the engines of global growth following the financial crisis in 2008, emerging markets now pose a threat to world financial stability.

     

    “The current environment is potentially very toxic for emerging markets,” Eamon Aghdasi, a strategist at Societe Generale SA in New York, said in a phone interview yesterday. “You have two very troubling things: uncertainty about the Fed policy, combined with concerns about growth, particularly in China. It’s difficult to justify that it’s time to go out and buy emerging markets at the moment.” "

     

    http://bloom.bg/1l58l2k
    24 Jan 2014, 09:05 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (5666) | Send Message
     
    Author’s reply » Another good article on this subject of violent FX movements due to FED actions:

     

    "Could it be that the Fed’s ultra-easy monetary policy has already inflated yet another speculative bubble that is about to burst, or at least lose lots of air very quickly? If so, the obvious candidate is emerging economies, which borrowed lots of money (often in dollars) in recent years. They were able easily to attract foreign buyers, who were “reaching for yield” because interest rates were so low in the bond markets of the US, Europe, and Japan. The capital inflows boosted their currencies. That may have started to reverse during the spring and summer of 2013, when Fed officials began to talk about tapering QE, which boosted bond yields in the US and around the world, especially in the emerging economies.

     

    If this bubble is about to burst, then once again Fed officials didn’t see it coming. They’ve been aware of the possibility, but minimized its likelihood. Obviously, they once again are failing to learn from history, which shows that easy credit conditions always lead to speculative bubbles that inevitably burst. Let’s review what Fed officials said (or did not say) on this subject:
    ...."

     

    http://bit.ly/1aVs91y
    26 Jan 2014, 01:07 PM Reply Like
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