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The rumored Hilsenrath "tapering" story - originally expected to come out late Thursday -...

The rumored Hilsenrath "tapering" story - originally expected to come out late Thursday - instead came out after yesterday's market close. It's mostly a summary of what's already known - that Fed officials plan to reduce asset purchases in steps, the timing of which is still being debated. The article leans heavily on Richard Fisher and Charles Plosser, two well-known hawks (and non-voters on the FOMC this year) who would have already tightened if it was up to them. A number of Fed speakers - including Bernanke - are set to speak next week.
Comments (54)
  • Southwest Michigan Trader
    , contributor
    Comments (404) | Send Message
     
    Here's my take on what Hilsenrath is telling you: http://seekingalpha.co...
    11 May 2013, 08:04 AM Reply Like
  • Joe2922
    , contributor
    Comments (406) | Send Message
     
    What I've seen is every potential bearish portent so far has become a non-event and led to a higher U. S. market. With data compiled since inception, as far back as the data goes, to 1927 on the S&P 500, the stock market goes through 4 cycles, and currently in Blowoff rally mode. Enjoy the Party just don't get drunk and miss the inevitable sell signal: http://bit.ly/WpVqYk
    11 May 2013, 10:00 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4540) | Send Message
     
    Joe,
    We are nowhere near "blowoff" mode , intermediate top maybe , but no signs present of a "major" top.

     

    You have been reporting sell signals thru this entire rally. This is another that will prove incorrect.

     

    Buy into any corrective phase.
    11 May 2013, 10:20 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    I concur with F&G; it is very bullish still, the wonder boy and the professor are having the greatest time of their lives.

     

    Long live the wonder boy and the professor!
    11 May 2013, 10:22 AM Reply Like
  • Joe2922
    , contributor
    Comments (406) | Send Message
     
    I think you misunderstand what I mean: It's a Blowoff Rally with THE top undeterminable, as Blowoffs can run a long time. The only clue now is the trendline from 2000 & 2007 peaks that stops at DOW 16000 and also at SPX 1600 which was surpassed. First big win for the Bears indicates top is in, but the Bears have been quite lame. I'm objective, and I have posted many bullish facts, such as 3700 stocks now down from 5000 and massive corp. buybacks also reduced supply, while CB and 352 bond funds have bought stocks and continue to do so. No market goes straight up forever.
    11 May 2013, 10:28 AM Reply Like
  • TheeSeer
    , contributor
    Comments (225) | Send Message
     
    Joe, to the point and right on the mark!
    11 May 2013, 10:37 AM Reply Like
  • Joe2922
    , contributor
    Comments (406) | Send Message
     
    To further clarify: There is no sell signal now in the charts.
    11 May 2013, 10:39 AM Reply Like
  • RS055
    , contributor
    Comments (1876) | Send Message
     
    Fed bond buying is , I believe, closely linked to our Budget Deficit. The budget deficit trend is as follows: 2011:$1,300 Bil, 2012: $1,100 Bil, forecasted for 2013: $850 Bil. Current Fed bond buying: $1,020 Bil/yr ( $85 Bil/mo).
    Ofcourse, the forecasted deficit is highly dependent on the economy - if it continues to muddle along the Fed would be buying a bit more than the deficit. How loose or tight the Fed bond buying is - is relative to the Budget Deficit. So if the deficit , in fact looks like $850 Bil for 2013, the Fed could taper their buying back to about $70Bil/mo and be about as accomodative as they were in late 2012. No great disaster for markets - unlessthe algos react violently and emotionally. Therefore this Hilsenrath leak is simply a heads up to Wall Street to reprogram the algos , so they dont over react.
    11 May 2013, 11:45 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4540) | Send Message
     
    Joe,
    i guess i misunderstood the meaning of these comments also

     

    Apr 20th : you commented "Certainly a correction is underway, and it may be worse than most bulls envision. Some unique charts that show the whole picture: http://bit.ly/WpVqYkion.

     

    Apr 30th - your comment "Let's see, op earnings decline, share buybacks prop it up, and the bulls expect multiples to increase at the same time? When has that ever happened?
    Time to sell the market is now, most likely, these 5 charts show it
    http://bit.ly/WpVqYk

     

    No need to add any more -

     

    Best of Luck !
    11 May 2013, 01:13 PM Reply Like
  • Joe2922
    , contributor
    Comments (406) | Send Message
     
    Oh, it's called trading, play the odds, no one wins every trade. Key is to win big, lose small.
    11 May 2013, 01:53 PM Reply Like
  • lildimsum7
    , contributor
    Comments (521) | Send Message
     
    what do "signals" in the charts have to do with when to buy and when to sell? imaginary patterns are utterly meaningless. understanding the substance of situations is the only logical way to look at this
    12 May 2013, 03:11 AM Reply Like
  • Joe2922
    , contributor
    Comments (406) | Send Message
     
    Hey lildim, if that works for you, fine...I respect anything that works consistently. Too many investors believe there won't be another bear market because the Fed will always save them -- that is ludicrous to me, and very dangerous. I've been trading 30 years, and I know bear always follows bull and these cycles have repeated ever since the beginning of financial markets. The "substance of situations" can change very quickly, as well as how the market views it.
    12 May 2013, 09:31 AM Reply Like
  • lildimsum7
    , contributor
    Comments (521) | Send Message
     
    you could follow bull/bear cycles by examining the data behind it. there will always be peaks and troughs, but patterns in charts is a completely illogical way to justify economic cycles. market timing is for fools, but if you understand economics and believe a recession is coming due to something like austerity, the best thing you could do is hold cash or create an ark in your portfolio.
    12 May 2013, 01:48 PM Reply Like
  • IncomeYield
    , contributor
    Comments (1460) | Send Message
     
    The Fed is "stuck" and they know it. Raise interest rates appreciably, payment nation will go back into hibernation. Share prices will drop and another round of layoffs will ensue in an attempt to keep the E in P/E under control. Up will go unemployment.

     

    There are still plenty of 6 figure jobs currently in the public and private sector that could be easily cut. Admins in health care and education will be targets this next go round.
    12 May 2013, 07:47 PM Reply Like
  • IncomeYield
    , contributor
    Comments (1460) | Send Message
     
    I still say the Apple bond sale will prove to be the top.
    12 May 2013, 07:48 PM Reply Like
  • Joe2922
    , contributor
    Comments (406) | Send Message
     
    You say market timing is for fools, then you explain how you do market timing differently. Anyone can use hindsight to criticize a trade, but in the moment, taking the high odds trades and using good money management, leads to long term outperformance over buy and hope.
    13 May 2013, 08:17 AM Reply Like
  • lildimsum7
    , contributor
    Comments (521) | Send Message
     
    yea... not really. investing at a discount to intrinsic value leads to long-term outperformance, but trading leads nowhere. there's no logical reason that extrapolating imaginary patterns would lead to outperformance. people who react to price action rather than price direction are the ones who are acting irrationally in the market. but I don't mind. traders create volatility that give me great prices for good companies.
    13 May 2013, 12:11 PM Reply Like
  • samooh
    , contributor
    Comments (12) | Send Message
     
    we have to get out from stock market
    11 May 2013, 09:23 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    $85B a month if kept going for another year, would amount to $85x12= $1.02B. This is a lot of money much like equal to our annual GDP growth. Despite what folks preached about 'monetized', the bottom line is that this $1.02 is in fact a loan.

     

    Debt is like a millstone tied around one's neck, says the Scriptures.

     

    If run out of control, it could become treacherous.
    11 May 2013, 10:04 AM Reply Like
  • Joe2922
    , contributor
    Comments (406) | Send Message
     
    What about the Fed just holding those bonds and MBS until they mature?
    11 May 2013, 10:30 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    Joe,

     

    I have no problem with that, I think our robust economy and the vibrancy of the American people could withstand that (easily); but it is wise to tapering it off, slowly...
    11 May 2013, 10:34 AM Reply Like
  • Joe2922
    , contributor
    Comments (406) | Send Message
     
    I don't believe our economy is robust, and the data bear out a weak one, in whole. The stock market this year is up Much more than earnings, so that means multiples are indeed rising so far in 2013, and that is the foundation of the Bulls' argument. Growth is very slow, and well below the long term average.
    11 May 2013, 10:37 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    Pardon my typo, $1.02B would be $1.02T.

     

    Sorry for this.
    11 May 2013, 06:23 PM Reply Like
  • IncomeYield
    , contributor
    Comments (1460) | Send Message
     
    The "economy" is OK so long as Joe Consumer can get a sub 4% mortgage, a sub 3% HELOC a 2 or less auto loan and zero % for 6 to 60 months on everything else.

     

    And, their home value stays up, and they can get 4 or 5% yield from AT&T.

     

    The consumer is doing essentially what the banks are doing. Borrowing at or near zero and earning 3 to 5% in the stock market and home appreciation.

     

    This bubble is the mother (happy Mother's Day) of all bubbles. It touches in some way almost everyone in the world.
    12 May 2013, 07:54 PM Reply Like
  • dragos2901
    , contributor
    Comments (73) | Send Message
     
    Oh, what a fall this is going to be (perhaps in the fall).
    11 May 2013, 11:02 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    But the wonder boy is in firm control.

     

    The wonder boy is a trend like the Yo-Yo, the Levi Jean; we are now Africa hot!
    11 May 2013, 11:07 AM Reply Like
  • Skull & Bones
    , contributor
    Comments (59) | Send Message
     
    Just to be clear. The Hilsenrath story was never a rumor.....it was a fact known, in advance, by the front running elite who successfully CRUSHED the retail trade who was selling into Friday's open based on this "rumor". The Fed is engaged in policy that may ultimately crush the vast majority of citizens in America......and they are doing it with the full blessing of the US Government.
    11 May 2013, 11:45 AM Reply Like
  • pollyserial
    , contributor
    Comments (1055) | Send Message
     
    Well to be fair, if retail trade isn't prepared for these shenanigans by now they only have themselves to blame. The key is, stay small and don't blink. Easier said than done I know, but if you choose to play no limit hold 'em with gorillas, that's your own choice......and you just better be sure that you've got a great hand. Hindsight is 20/20 but looking back it's easy to see that waiting to sell a double touch near 1635 EOD was the move. (for my part I sold 1634 Thursday, closed it out early Friday and now regret not re-posting EOD.....but the market exists mostly to frustrate us, right?)
    11 May 2013, 12:43 PM Reply Like
  • justaminute
    , contributor
    Comments (581) | Send Message
     
    "but if you choose to play no limit hold 'em with gorillas, that's your own choice" Not when the Fed is forcing you into the game. It's hardly a choice. Not "playing" causes you to lose.
    11 May 2013, 12:52 PM Reply Like
  • marketwatcher23
    , contributor
    Comments (935) | Send Message
     
    liquidity trap
    11 May 2013, 12:37 PM Reply Like
  • RS055
    , contributor
    Comments (1876) | Send Message
     
    The likelihood is that "financial repression" ( AKA Zero interest) will continue for a long time ( 2+ years). The Fed policy has already shifted to tweaking their bond buying , rather than interest rates.
    So- the likelihood is that staying in cash for prolonged period will result in zero nominal returns and negative real returns.
    To preserve capital and ideally make a bit of money - it is , therefore, necessary to own risky assets.
    But, the catch is that just because an asset is risky does not mean you will ultimately make money! Selectivity and market timing are key.
    So , the way I see it, one needs to own carefully selected investments - not cash. But doing so blindly ( indexing) or foolishly ( leverage) is not likely to work out.
    To make money now - you have to do some work, have a risk discipline, understand valuations and watch out for the various landmines out there. Its not a no-brainer.
    11 May 2013, 12:55 PM Reply Like
  • Watercayman
    , contributor
    Comments (7) | Send Message
     
    I agree with this. Looking at mREITs now, as the low interest rates should continue for a while, and the biggest competitor in history (FED) will soon reduce its competitive buying. REITs should likely have a window to profit well here.
    11 May 2013, 09:19 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4009) | Send Message
     
    I have enjoyed trading this market and holding on to some long term investments; although, I remain generally bearish on the economy as a whole. Main Street is still in the doldrums and many state and local governments are struggling to fund their pension liabilities. I won't even begin to talk about unfunded and off balance sheet liabilities on the federal level. The Fed is engaging in unpresidented experimentation with Keynesian pump priming which causes me to hedge with some precious metals and other hard assets. Natural gas could well fuel the next economic boom if the politicians and fear mongers would get out of the way.
    11 May 2013, 01:18 PM Reply Like
  • yliu54
    , contributor
    Comments (170) | Send Message
     
    Well, actually this article is nothing more than a reminder, let's see how this crazy overbought market will react to the old news.
    11 May 2013, 02:25 PM Reply Like
  • june1234
    , contributor
    Comments (2499) | Send Message
     
    Debt ceiling gets hit May 18th. Treasury will need to come up with extraordinary measures if they don't make a deal beforehand; those measures can buy em a few months or so
    11 May 2013, 03:39 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    June,

     

    I believe good old Lew the coffer (empty) keeper said that it the ceiling won't be hit till September 04 Labor Day. Since he is the one keeping tabs on the balance sheet (all red) I do suppose he knows what he is talking about. BTW this issue had been so eerie quiet for the past two months or so. Suspect.

     

    April was north of $100B surplus, thanks to boomers handing in large sums of taxes due for tax year 2012 on their IRA's, myself included.
    11 May 2013, 03:53 PM Reply Like
  • apppp
    , contributor
    Comments (382) | Send Message
     
    Presuming he knows what he is talking about is a pretty big leap of faith in any government official.
    11 May 2013, 06:26 PM Reply Like
  • yliu54
    , contributor
    Comments (170) | Send Message
     
    Should be Sep. 2nd?
    11 May 2013, 09:35 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    Yup.
    11 May 2013, 09:37 PM Reply Like
  • june1234
    , contributor
    Comments (2499) | Send Message
     
    Markets are in parabolic land ignoring any and all bad news. Premiums on credit default swaps are trading at an all time low . Margin debt on the NYSE tied the highest levels ever (July 2007).
    12 May 2013, 12:53 PM Reply Like
  • apppp
    , contributor
    Comments (382) | Send Message
     
    Can't taper, won't taper.
    11 May 2013, 06:26 PM Reply Like
  • apppp
    , contributor
    Comments (382) | Send Message
     
    How prescient.
    18 Sep 2013, 06:54 PM Reply Like
  • 7of9
    , contributor
    Comments (299) | Send Message
     
    Hey Fed, please give us a correction already. People hate this nonstop rally. It looks too artificial. I know you are trying to have the higher asset prices blanket the economy but it looks too silly. We are veering too far from the illusion of free market.
    11 May 2013, 06:59 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3583) | Send Message
     
    I don't 'hate' it, necessarily... 401k gives it two thumbs-up, actually.
    11 May 2013, 07:08 PM Reply Like
  • Watercayman
    , contributor
    Comments (7) | Send Message
     
    "The article leans heavily on Richard Fisher and Charles Plosser, two well-known hawks (and non-voters on the FOMC this year) who would have already tightened if it was up to them."

     

    Very important detail. Of course Fed spending will slow down at some point, but to suggest anything is in play in this or the next quarter based on these sources is not great journalism by WSJ. They've been saying much the same for a long time.
    11 May 2013, 09:18 PM Reply Like
  • cmmillsap
    , contributor
    Comments (2) | Send Message
     
    The Fed wants to dribble this information out to blunt the equity market reaction.
    11 May 2013, 09:52 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8150) | Send Message
     
    "Tapering" = Much higher yields = $$$ for those who are short the T-Bonds.

     

    Easy money.
    11 May 2013, 10:08 PM Reply Like
  • yliu54
    , contributor
    Comments (170) | Send Message
     
    Can't wait to see how futures will move tonight!!
    12 May 2013, 02:51 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (971) | Send Message
     
    From Bernanke's speech last Friday - "More recently, gains in household net worth have been concentrated among wealthier households, while many households in the middle or lower parts of the distribution have experienced declines in wealth since the crisis. Moreover, many homeowners remain "underwater," with their homes worth less than the principal balances on their mortgages. Thus, more detailed information clarifies that many households remain more financially fragile than might be inferred from the aggregate statistics alone."

     

    This says two things to me. Firstly, he's admitting that QE hasn't done anything beyond feathering the beds of the wealthy. Secondly, future stimulus will come in the form of mortgage principal foregiveness and other forms of money throwing directed at Main Street rather than Wall Street.

     

    End of QE will NOT lead to austerity, only a different form of stimulus, underpinned by continuation of ZIRP. None of this should scare the market, but perhaps a rotation in which industries benefit the most from a new direction in stimulus money printing.
    12 May 2013, 01:45 PM Reply Like
  • Jason Burack
    , contributor
    Comments (1721) | Send Message
     
    QE cannot stop. They may cut it back temporarily but that's all the Fed can do.
    12 May 2013, 06:00 PM Reply Like
  • IncomeYield
    , contributor
    Comments (1460) | Send Message
     
    Yup, everyone knows what happens when the teaser rate ends.
    Unfortunately, Ben has now tied Main Street even more tightly to Wall Street and Fed policy.

     

    What does/did he think would happen. We will just throw fuel on the fire and when the fire is going on its own, we will turn-off the fuel. These guys along with greentech need a lesson in Thermodynamics. :)
    12 May 2013, 07:57 PM Reply Like
  • sideline$
    , contributor
    Comments (14) | Send Message
     
    How does the new way they will measure GDP (starting this July) play into this?
    13 May 2013, 01:31 AM Reply Like
  • sideline$
    , contributor
    Comments (14) | Send Message
     
    How does the new way they will measure GDP (starting this July) play into this?
    13 May 2013, 01:31 AM Reply Like
  • sideline$
    , contributor
    Comments (14) | Send Message
     
    How does the new way they will measure GDP (starting this July) play into this?
    13 May 2013, 01:31 AM Reply Like
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