Taper: game on

[spdrun]

MBS and treasury purchases are being reduced by $5 billion each come January for a total of $10 billion. Yay!

Apparently, the Dow thinks this is something to celebrate (at least for now), NASDAQ comp is flat.

[Coronita]

Read the fine print.

“Look ma!… Another tin can on the ground that I found to kick!…And my, can I kick this other can for a long time and further too!”

http://finance.yahoo.com/news/fed-faces-tough-call-bond-051027295.html

Fed cuts bond-buying but stresses easy policy

WASHINGTON (Reuters) – The U.S. Federal Reserve announced plans to trim its aggressive bond-buying program on Wednesday but sought to temper the long-awaited move by suggesting its key interest rate would stay lower for even longer than previously promised.
In what amounts to the beginning of the end of its unprecedented support for the U.S. economy, the central bank said it would reduce its monthly asset purchases by $10 billion to total $75 billion. It trimmed equally from mortgage and Treasury bonds.
The move, which could come as a surprise to many investors, was a nod to better prospects for the economy and labor market and marks a historic turning point for the largest monetary policy experiment ever.
The Fed’s asset purchase program, a centerpiece of its crisis-era policy, has left it holding roughly $4 trillion of bonds, and the path it must follow in dialing it down is rife with numerous risks, including the possibility of higher-than-targeted interest rates and a loss of investor confidence.
The Fed “modestly” reduced the pace of bond buying in light of better labor market conditions, it said in a statement following a two-day policy meeting.
But in a move likely meant to forestall any sharp market reaction that could undercut the recovery, the central bank also said it “likely will be appropriate” to keep rates near zero “well past the time” that the jobless rate falls below 6.5 percent.

BTW: Facebook at 55 and now part of S&P 500…. Lol…. I guess I do own facebook now since I have Vanguard 500 Index funds….

Welcome to the wonderful world of make the rich(er) people with assets richer while people with no assets/limited assets poorer….

[spdrun]

I don’t see any fine print — I see a bunch of equivocation, as is typical for the Fed. “Likely be appropriate” means absolutely nothing.

[Coronita]

[quote=spdrun]I don’t see any fine print — I see a bunch of equivocation, as is typical for the Fed. “Likely be appropriate” means absolutely nothing.[/quote]

I think keeping interest rates pegged lower is the fine print…

The markets apparently seem to love it today…. I’m laughing my ass off right now… Because it’s comical..

[spdrun]

It is comical, because as of September, we found out that forward guidance has about the same level of utility as nipples on a boar hog. The only meaningful data are the actual decisions.

[Coronita]

[quote=spdrun]It is comical, because as of September, we found out that forward guidance has about the same level of utility as nipples on a boar hog. The only meaningful data are the actual decisions.[/quote]

Well, it’s comical because the bears screaming of an immediate market crash once tapering kicks in are seeing the bears are still hibernating . I was one of them especially in the equity markets when things ran up quickly…

Oh just admit it. You were wrong….

[spdrun]

I’m not wrong — the question isn’t “if” but “when” the correction happens. Meanwhile, I’ve done fine with investments, but I’m also not in the position to lose as much as I’ve gained 🙂

[Coronita]

[quote=spdrun]I’m not wrong — the question isn’t “if” but “when” the correction happens. Meanwhile, I’ve done fine with investments, but I’m also not in the position to lose as much as I’ve gained :)[/quote]

The questions is the time it takes the “when” to happen, how much opportunity cost has been lost waiting for the “when” to happen.

It’s almost like folks that sat out years and years and years renting waiting for a RE correction…Wait another 5-8 years for another downcycle after already waiting 5-8 years for the first downcycle…. Um ok….

Most people can’t outsmart the markets for a very long time… If they could, they would be working for Goldman Sachs, and even then, they don’t get it right all the time…

That was my personal lesson learned for the past few years.

[spdrun]

If you read about what’s happening in Phoenix and Las Vegas, property is already correcting. Investors are leaving like rats, very little organic demand to replace them.

[Coronita]

[quote=spdrun]If you read about what’s happening in Phoenix and Las Vegas, property is already correcting. Investors are leaving like rats, very little organic demand to replace them.[/quote]

And your point is?

[spdrun]

Bubbles can’t stay inflated forever, no matter how much the PTB want them to 🙂

And with any luck, we’ll see principal mods with few strings attached next year. More people able to sell at lower prices without doing a short sale or going to foreclosure. Buyers win, sellers win, everyone but the banks win, and I don’t really care about the banks.

Besides, who knows what the Fed will do next year. On the one hand, you have Yellen who has a reputation of being quite dovish. On the other hand, you have the voting seats on the BoG actually rotating to more conservative members.

[The-Shoveler]

I am still saying it’s not about housing or Stocks, it’s about local municipalities not being in a position to afford another housing or stock market crash,

When the City of L.A. is sitting on surplus then I would start worrying

[spdrun]

On the whole, property prices don’t matter as much nationally, since the majority of states don’t have anything like Prop 13. i.e. national policy isn’t made based on Prop 13.

Majority of areas would just raise the millage in order to make up for lower assessments. (Or may not even use sale prices for assessments — some areas use market rents, for example.)

[an]

DOW’s up 1.14%, NASDAQ’s up 0.43%, and S&P’s up 0.99%. I’ll take that. Now, lets see if it can continue through the rest of the year at this rate :-D.

[Coronita]

[quote=AN]DOW’s up 1.14%, NASDAQ’s up 0.43%, and S&P’s up 0.99%. I’ll take that. Now, lets see if it can continue through the rest of the year at this rate :-D.[/quote]

You mean Dow up 1.84% and Nasdaq up 1.15% and S&P500 up 1.46%….

🙂

[Author]

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