Interesting comments today from James Bullard about a potential tapering in December. I presume this is a kind of “underpromise and overdeliver” strategy via the Fed here where they’re saying they might taper, but then they’ll surprise the market in a positive way with no taper. This keeps markets on their toes and climbing a sort of “taper tower of worry”. It’s pretty clever actually. These guys might be taking a page out of corporate America’s playbook.
I don’t expect any taper until well after Janet Yellen has taken control of the Fed. Inflation is too low, growth is too anemic and expectations are still too negative. More via Bloomberg:
St. Louis Federal Reserve president, James Bullard, sat down with Bloomberg Television’s Erik Schatzker this morning live from Bloomberg’s The Year Ahead: 2014 conference in Chicago and said:
– Taper is ‘on the table’ for the central bank’s next policy meeting and a strong jobs report would increase Dec. Taper chance.
– Says QE as effective as it’s ever been and doesn’t buy argument that QE has diminishing returns
– Fed seeks to push people into riskier assets
– Fed doesn’t directly target asset prices
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.
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