I keep saying that “tapering” isn’t “unprinting”. That is, if you’re inclined to believe that QE = “money printing” then “tapering” = “less money printing”. It’s still “money printing”. It’s just less “money printing”. So, if your bullish thesis (or conspiracy theory) revolves around QE continuing then here are 7 reasons to convince yourself that QE isn’t ending any time soon (via ZeroHedge, but really via Merrill Lynch):
“1. Both growth and inflation data continue to come in below the Fed’s forecasts and they will likely revise their GDP and inflation forecasts lower at the September meeting.
2. The unemployment rate has moved closer to the 7% “indication” for ending QE; however, as we have argued and the minutes confirm, the Fed is only using 7% as a rough summary statistic for a broad-based recovery.
3. At the July meeting, just one meeting before the alleged certain tapering, the Fed showed no urgency. They had inconclusive debates about inflation, growth and financial conditions, and they had no discussion of the specifics of tapering.
4. Public statements by Fed officials have been similarly ambiguous. Time is running out.
5. The Fed has never said September is the month, they have consistently said “later this year” — that means at any of the next three meetings.
6. The Fed meets on September 18, right in the middle of what could be another nasty fight over the budget and the debt ceiling. A key reason for tapering is that fiscal risks are fading with the cliff behind us. But are they really fading or is this just a temporary lull in the fiscal fracas?
7. Last, but not least, the core of a bullish forecast — a solid housing recovery — is now in serious doubt.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.