Seeking Alpha

Fed to taper $10B per month

  • It's here: The Fed announces a $10B per month taper.
  • Fed funds target unchanged at 0-0.25%.
  • Treasury purchases cut to $40B per month.
  • MBS purchases cut to $35B per month.
  • Full statement
Comments (49)
  • What do you guys think? This doesn't look anything to freak out over, seems mild to me, think they are dipping into the water to see how everyone reacts.


    18 Dec 2013, 02:06 PM Reply Like
  • Watch rates tick up, especially at the long end.
    18 Dec 2013, 02:59 PM Reply Like
  • Do you think it will be a slow or rapid tick up?


    Yep, I am asking you to look into your crystal ball :-)
    18 Dec 2013, 03:23 PM Reply Like
  • yea. look at the dollar
    18 Dec 2013, 03:44 PM Reply Like
  • It has to happen eventually. A small taper shouldn't freak people out. Market seems to like it right now.
    18 Dec 2013, 02:08 PM Reply Like
  • No comment from DeepValueLover? Still yammering about the taper that was never supposed to happen?
    18 Dec 2013, 02:14 PM Reply Like
  • @SIMON


    First 10 billion is just a test. Now I am not DVL but did I miss gold selling off on the news??
    18 Dec 2013, 02:51 PM Reply Like
  • Why would gold sell off on news of a smaller taper than expected?
    18 Dec 2013, 03:15 PM Reply Like
  • Was a taper expected ?? I might have missed that memo..
    18 Dec 2013, 03:20 PM Reply Like
  • Depends on who you listen to I suppose. El-Erian had it at 60% chance.
    And Bullard had previously suggested a higher magnitude reduction.
    18 Dec 2013, 03:23 PM Reply Like
  • I knew they would do it very slowly - what other way? Market up over 100.
    18 Dec 2013, 02:16 PM Reply Like
  • Is it tapper or joke?
    18 Dec 2013, 02:18 PM Reply Like
  • Much better than no taper at all. This should be healthy for the market, for both short and longer terms.
    18 Dec 2013, 02:18 PM Reply Like
  • Sorry, Simon Says, but I can't leap onto SA the moment a story breaks...I guess I should have cancelled that hike! lol.


    I admit it...I blew this call!


    Did not expect a taper during a deflationary hurricane.


    Got gold?




    Anybody else here have the cajones to admit they were wrong?
    18 Dec 2013, 02:22 PM Reply Like
  • Hey, who doesn't make wrong calls and decisions? Clear thinking is everything an investor could hope for, such is the way of the market, and we should all be thankful that people are generous to share their ideas here on SA.
    18 Dec 2013, 02:31 PM Reply Like
  • @DVL


    Maybe Ben just handed Janet a hand grenade with the pin pulled? This is a start however lets see when the next one comes. If it takes 6 months for the next 10 billion cut then I would re evaluate what just occurred.


    I also never expected it , however not sure if this is a one time cut or well see another one quickly..


    The markets actually going up and gold not selling off makes me believe this is a bone thrown before Ben departs !
    18 Dec 2013, 02:55 PM Reply Like
  • Props to you DVL.
    I'm just wildly confused by gold bugs. Sometimes it is "Ohh no, USA is next Weimar" and sometimes it is deflation.
    18 Dec 2013, 03:17 PM Reply Like
  • @SIMON


    So you have ruled out deflation then? I haven't.


    As far as FED members stating that a taper might happen I have heard that for over 6 months now.. So I really had no clue when/if this was going to happen


    Personally, I think a bone was just thrown before BEN left office. Let's see where we are in a few months. I really don't see gold selling off much on this news either.


    Just look at how the dollar reacted.. Time will tell.
    18 Dec 2013, 03:31 PM Reply Like
  • Defalationary? I wish my rent, cell phone, electric, high speed internet, and water bills would deflate... that just keeps going up and up and up. Food hasn't been getting any cheaper either.
    18 Dec 2013, 03:47 PM Reply Like
  • It still hasn't happened yet...


    but yes I was thinking if anything they would increase QE, 10 bil just a drop in the bucket though
    18 Dec 2013, 03:48 PM Reply Like
  • Are you kidding? Gold trades on inflation and fear. Inflation expectation is to not go above 2% for a very long time (unless you think you know better than the fed). Fear just went way down (see VIX).
    18 Dec 2013, 04:11 PM Reply Like
  • Well, SimonSaysShort, I believe in this guy's rule:



    So, eventually, the Fed will be (electronically) printing trillions and the world will be stuffed like a family after Thanksgiving dinner and will collectively say "no màs".


    Watch Japan and the yen over the next few years...that is where we are heading.


    But RIGHT NOW?


    Global deflation.


    I expect the Fed, the Treasury and congress will just assume that the world will have a bottomless appetite for USD forever and act accordingly.


    Got a pork project you want brought to your district?


    Climb aboard the dollar train!!
    18 Dec 2013, 07:27 PM Reply Like
  • The VIX dropped almost 15% today and gold did nothing...very unusual.


    If people are waiting for gold to drop another few hundred dollars or so then I don't know how that can happen when the the VIX collapses and gold does nothing.
    18 Dec 2013, 07:30 PM Reply Like
  • Interesting Times:


    I just hope the anti-gold folks notice that gold isn't exactly collapsing with the VIX today (I haven't seen that since late 2009).


    Strange stuff.
    18 Dec 2013, 07:36 PM Reply Like
  • Excellent! The uncertainty is over and the markets are liking it.
    18 Dec 2013, 02:26 PM Reply Like
  • More interesting still is the fact gold and silver aren't tanking. Another false narrative?
    18 Dec 2013, 02:34 PM Reply Like
  • I actually thought they would expand the program after the catastrophe this summer. Equities love it (they already knew what was coming)...should be good for the dollar. If Japan and the USA in the 1930's you don't want to maintain these programs for all that long either. We have an energy boom going on...something we haven't had since prior to World War II. Even though I remain long treasuries there obviously is a lot to be said for allowing interest rates to rise. (Government must stand on its own two feet too.)
    18 Dec 2013, 02:55 PM Reply Like
  • Seems like the uncertainty/taper has been priced in. Im pretty sure gold and silver would have rallied big if no taper (like last time).
    18 Dec 2013, 03:36 PM Reply Like
  • The Fed should end QE and instead lower the interest rate the Fed pays banks. Commercial banks have about $1.6 trillion in accounts at the Fed, which is paying them an interest rate of about 0.25%. If banks can get a risk free return, why would they ever bother with increasing loans ?
    18 Dec 2013, 02:55 PM Reply Like
  • I still believe that we'll have QE as long as banks world wide are struggling.
    18 Dec 2013, 04:03 PM Reply Like
  • I am surprised they showed the spine and started it now. Gradual wind down is good. It's all good.
    18 Dec 2013, 02:55 PM Reply Like
  • I don't get the relationship between gold prices and tapering. We have a Fed with a balance sheet in excess of $4 trillion. It will be virtually impossible to unwind that without negative consequences to the USD and our debt situation. Tapering has absolutely NOTHING to do with the price of PMs.
    18 Dec 2013, 02:56 PM Reply Like


    Many have posted that once the taper started the dollar would get stronger and gold will sell off.


    Do you disagree ?


    18 Dec 2013, 03:01 PM Reply Like
  • The dollar never even realized the effects of QE. Why would it wise up now?
    18 Dec 2013, 03:35 PM Reply Like
  • Will Yellen twerk? Will she twerk?
    18 Dec 2013, 02:58 PM Reply Like
  • hahaha the market turns crazy.
    18 Dec 2013, 02:58 PM Reply Like
  • as usual bond market is telling the story
    18 Dec 2013, 02:59 PM Reply Like
  • so bond funds fall?
    18 Dec 2013, 04:00 PM Reply Like
  • watch the dollar it tells a story too. Euro tanked after the announcement
    18 Dec 2013, 04:22 PM Reply Like
  • $10bln per month until the first hiccup of the housing market or bond sales. Then right back in. These guys care nothing about creating mountains of debt to prolong people's delusions.


    This means nothing related to the health of the market or the economy.
    18 Dec 2013, 03:04 PM Reply Like
  • They have tapered down to 75 billion a month and that could be end of taper for 2014.


    It won't stop all the 'experts' debating whether more is coming each month or not... or writing articles about it... but I have a suspicion taper is over for the immediate future.
    18 Dec 2013, 03:25 PM Reply Like
  • /I think it's a good move, at least on the surface, and at this moment in time, I am embracing it..
    18 Dec 2013, 03:48 PM Reply Like
  • So it seems Feds always surprise going against conventional guesstimates.. which makes me think that the next surprise will be a card that hasn't been played yet. QE4? Undoing taper?
    18 Dec 2013, 04:12 PM Reply Like
  • Why?
    18 Dec 2013, 04:37 PM Reply Like
  • QE4? That makes no sense. This wasn't a surprise - everyone knew the taper was coming, but no one was sure when. Now we know.
    18 Dec 2013, 08:12 PM Reply Like
  • Just joking guys (epic fail obviously)... but I thought most pundits had put off taper announcements to early next year after Yellen takes over.
    19 Dec 2013, 08:31 AM Reply Like
  • Can't find my earlier comment. Anywayz, t'was a pathetic attempt by me to humor. Epic fail at that.
    19 Dec 2013, 12:50 PM Reply Like
  • The fed said they were going to taper by a small amount - in the pre-meeting media presentations. (They really did.)


    They said they're going to keep tapering by 10B a meeting. Unless economic data (housing, bond sales) shows real erosion.


    They've said (both BB & Yellen & others) that QE is no longer having the desired effect and they want to taper as long as it won't cause a rate fear reaction & economy stays steady as is or better. They've stuck with their word. They will continue to. So tapering will continue at a slow steady rate, only adjusted if economic numbers show a problematic reaction. No QE forever. No "small taper but it's not for real and they'll stop next month."


    So moving on... if they taper 10B each meeting, how will it effect earnings & revenues? How much of good earnings are built on buybacks & how much on good economy? Rates will creep up. What sectors will that effect that haven't over-absorbed it? Looks like a bull, but what's going to cause the dips -- anything big coming?
    18 Dec 2013, 08:23 PM Reply Like
  • Rates will creep down because the bond traders can't front run the Fed anymore.
    18 Dec 2013, 09:42 PM Reply Like
DJIA (DIA) S&P 500 (SPY)