Is the Fed even tapering?

[Madison320]

Has anyone else noticed that the Fed's tapering that was supposed to start in November, hasn't seemed to start yet? They should be down to around 60 billion a month for january but they're still over 100 billion.

My guess is they're already having trouble with rates spiking and are trying to delay the taper for as long as possible, hoping for a miracle.

https://www.federalreserve.gov/monet...centtrends.htm

[acptulsa]

Has anyone else noticed that the Fed's tapering that was supposed to start in November, hasn't seemed to start yet? They should be down to around 60 billion a month for january but they're still over 100 billion.

My guess is they're already having trouble with rates spiking and are trying to delay the taper for as long as possible, hoping for a miracle.

https://www.federalreserve.gov/monet...centtrends.htm

Either that or they want to destroy the FRN and replace it with something global, with no cash version.

And that does allow them to give that much more to their buddies at Pfizer to buy gold with. It's also driving down wages (while allowing them to give "raises") and destroying the middle class and Boomers' savings. Neither of which they have shied away from the last fifty years. Not to mention building up the surveillance state.

Sometimes the simple explanation is the correct one.

[Madison320]

Either that or they want to destroy the FRN and replace it with something global, with no cash version.

And that does allow them to give that much more to their buddies at Pfizer to buy gold with. It's also driving down wages (while allowing them to give "raises") and destroying the middle class and Boomers' savings. Neither of which they have shied away from the last fifty years. Not to mention building up the surveillance state.

Sometimes the simple explanation is the correct one.

I doubt they're doing it on purpose. If the dollar crashes it's more likely they're out of a cushy job.

I think they're just kicking the can down the road as always, only in this case the end of the road is in March. My guess is they're hoping if that maybe inflation readings will start cooling off, maybe the markets will go into a slight correction, anything so they can call off the taper and keep rates at 0%.

It's going to get real interesting by March or so. I'm guessing they might cancel the taper and call it a "mid course correction" like they did during the repo crisis in fall of 2019(?).

[acptulsa]

I doubt they're doing it on purpose. If the dollar crashes it's more likely they're out of a cushy job.

They started this just as confident as the next psychopath that they could land on top of that heap. And knowing full well that they can get enough kickbacks to pay their rent in Oman for the next six thousand years, just in case.

I guess you haven't noticed that the previous CEO of CSX sold off so many assets just for a few fat quarterly bonuses that they could no longer do the job, and competitor Norfolk Southern was able to do this...



The future means nothing to sociopaths. The Biden Administration are the ultimate corporate raiders, and it's the U.S. of A. they're destroying for fun and profit.

[oyarde]

None of it matters . The Fed will raise the interest rate a 1/4 point a quarter this yr and next and it wont do anything. Youve got double digit inflation locked in this yr best I can tell by raw matl costs , production and energy costs etc

[acptulsa]

None of it matters . The Fed will raise the interest rate a 1/4 point a quarter this yr and next and it wont do anything. Youve got double digit inflation locked in this yr best I can tell by raw matl costs , production and energy costs etc

Exactly. They printed like fools in the seventies, raised the prime interest rate to, what was it? 29%? And invented stagflation.

And, of course, blamed it on OPEC. Bah.

[Krugminator2]

Perfect cocktail for a market rally going into tomorrow. Nasdaq down 2.9% right now and a Fed day.

Fed days tend to be bullish no matter what they say. And if they are super hawkish, odds favor short term selloff then rally. Either way. odds favor stocks rallying on the Fed announce.

[Madison320]

None of it matters . The Fed will raise the interest rate a 1/4 point a quarter this yr and next and it wont do anything. Youve got double digit inflation locked in this yr best I can tell by raw matl costs , production and energy costs etc

I'm reading these articles yesterday basically saying "See, we don't need the Fed as a backstop! The market rallied back on it's own!"

Ha! Ha! Yeah, wait until the Fed actually CHANGES monetary policy from the loosest in history to something slightly less than the loosest in history. The whole idea that QT and rate hikes are priced in is gigantic joke. They were saying that last time in 2019 when rates were at 2% and the balance sheet at 3.9 trillion and then the "priced in" market collapsed and the Fed had to quickly lower rate and resume QE.

[Madison320]

Perfect cocktail for a market rally going into tomorrow. Nasdaq down 2.9% right now and a Fed day.

Fed days tend to be bullish no matter what they say. And if they are super hawkish, odds favor short term selloff then rally. Either way. odds favor stocks rallying on the Fed announce.

Krug! I thought you were gone!

It's getting interesting now. The box the fed is in is becoming more obvious everyday. Loosen and we get high to hyper inflation. Tighten and we get a historic collapse.

[Cowlesy]

I just put my flip a coin as to what the market is going to do one day to the next. Seems to work okay lol

[acptulsa]

@Madison320, Biden answered your question. Check out the flap over him calling a Fox reporter a son of a bitch. You were thinking he did that because he's senile. He did that to cover up what he said because he's senile.

He was asked if inflation would be a liability during the midterms. He replied, no it's an asset.

Remember what Vladimir Lenin said about inflation?

[Krugminator2]

Krug! I thought you were gone!

It's getting interesting now. The box the fed is in is becoming more obvious everyday. Loosen and we get high to hyper inflation. Tighten and we get a historic collapse.

I strongly doubt the situation is that dire.

I get a lot wrong but I posted for like six years here why pre-Covid wasn't inflationary. And then I posted why the big increase in M2 was highly inflationary. I wasn't completely sure but I thought it would be an interesting test case. Milton was right about QE and looks like he gets closest to the pin on M2 being the cause of the inflation. Unfortunately things like greedy businessmen and supply chain disruptions neither of which is capable of creating inflation across the board are getting the blame.

Steve Hanke should be the North Star for anyone interested in monetary policy. This WSJ article from a year ago was the way I thought the world worked and it seems to be correct.

[acptulsa]

Unfortunately things like greedy businessmen and supply chain disruptions neither of which is capable of creating inflation across the board are getting the blame.

That's the most clownish aspect of it all. During the post-Bretton Woods II printing spree, OPEC was the handy scapegoat. Now the scapegoats are either meaningless, like you say, or things they slapped us with to slow velocity--in other words, anti-inflationary.

As long as idiots are the majority, they'll say any damned thing.

[Madison320]

I strongly doubt the situation is that dire.

I get a lot wrong but I posted for like six years here why pre-Covid wasn't inflationary. And then I posted why the big increase in M2 was highly inflationary. I wasn't completely sure but I thought it would be an interesting test case. Milton was right about QE and looks like he gets closest to the pin on M2 being the cause of the inflation. Unfortunately things like greedy businessmen and supply chain disruptions neither of which is capable of creating inflation across the board are getting the blame.

Steve Hanke should be the North Star for anyone interested in monetary policy. This WSJ article from a year ago was the way I thought the world worked and it seems to be correct.

Of course M2 is the most strongly correlated with price inflation, it practically IS price inflation. But M2 is not good at predicting future price inflation in the long run.

In the long run it's the fed balance sheet that drives M1,M2, etc.

Fed balance sheet => M1,M2,M3 => price levels

Maybe we actually agree it's just that you're a short term investor and I'm extremely long term.

[Madison320]

This reminds me of 2019 when the Fed did its first rate hike to .25% and some people here were saying "See? Everything is fine!"

And I kept saying "yeah, get back to me when they get to a rate that's not basically zero, like 2%". And of course when we hit 2% everything started crashing. The only difference now is that we're in much worse shape with much more debt, so they'll be lucky to get to 1% this time.

And as I said in the OP they're supposed to be 3 months into the taper and they haven't even started!

[Pauls' Revere]

"soon"

DOW futures now -502.

[Krugminator2]

"soon"

DOW futures now -502.

The Nasdaq is down 20% from its high.... The soon already happened.... Unless you were saying buying futures at 1 am when stocks were down 2% was a good idea.

[Pauls' Revere]

The Nasdaq is down 20% from its high.... The soon already happened.... Unless you were saying buying futures at 1 am when stocks were down 2% was a good idea.

Thanks for adding reputation to this user. May you be lucky enough to receive the same Reputation back in turn.

[oyarde]

One thing to keep in mind is when the fed starts the 1/4 point increases even if they stop the purchases they wont try and reduce the balance sheet so that will be different . I think they will not because of what happened last time they tried both .

[oyarde]

So , is the fed tapering ? tapering purchases maybe , raising interest probably . None of which matters from where I see it . The country is in a considerably weaker position as far as money , debt , interest , inflation etc than it was 13 years ago before the debt tripled.

[Krugminator2]

Nasdaq close to green. Probably a good spot to get long stocks 3 to 7% move seems doable short term based on everything lining. Obviously Russia could invade Ukraine but doesn't seem like it will happen at least for a couple of weeks.

[Madison320]

So , is the fed tapering ? tapering purchases maybe , raising interest probably . None of which matters from where I see it . The country is in a considerably weaker position as far as money , debt , interest , inflation etc than it was 13 years ago before the debt tripled.

They've been printing 120 billion a month for the last year and a half and were supposed to reduce that by 25 billion a month, starting in november and finishing in march.

My point is not whether they are going to taper in the future but that they haven't even STARTED. Now they are going to have taper about 50 billion a month for the next 2 months to reach their goal of no QE by march.

My other point is that markets are almost in a bear market, despite the fact that the fed has not started!!! Imagine what's going to happen when they actually DO something!

[oyarde]

They've been printing 120 billion a month for the last year and a half and were supposed to reduce that by 25 billion a month, starting in november and finishing in march.

My point is not whether they are going to taper in the future but that they haven't even STARTED. Now they are going to have taper about 50 billion a month for the next 2 months to reach their goal of no QE by march.

My other point is that markets are almost in a bear market, despite the fact that the fed has not started!!! Imagine what's going to happen when they actually DO something!

I think by the end of 2023 the fed will want to be about 2 percent . There will be double digit inflation all yr this yr and still a lot of inflation next. So yes they have problems but the stock markets are grossly overvalued so they were going to dump at the end of fed purchasing regardless of rising interest rates probably.

[Krugminator2]

My other point is that markets are almost in a bear market, despite the fact that the fed has not started!!! Imagine what's going to happen when they actually DO something!

Markets are forward looking..... The 20% Nasdaq selloff was from anticipated rate hikes. It doesn't mean the market can't go lower over time but it will have nothing to do when the Fed starts hiking rates. By the time a known action happens any move that will happen will have already been priced in.

[Madison320]

Markets are forward looking..... The 20% Nasdaq selloff was from anticipated rate hikes. It doesn't mean the market can't go lower over time but it will have nothing to do when the Fed starts hiking rates. By the time a known action happens any move that will happen will have already been priced in.

Yeah, except the markets have no idea what's going to happen in the future.

The exact same thing happened in 2019. The fed started tightening, everything was "priced in", and then the bond market imploded.

If everything is priced in wouldn't the markets remain unchanged? The market would just hit a price based on the sum of all future events and that would be it.

[Krugminator2]

Yeah, except the markets have no idea what's going to happen in the future.

Markets aren't crystal balls but they are like betting lines in sports. They are the best guess based on collective wisdom and it is hard to outguess the wisdom of crowds.

If everything is priced in wouldn't the markets remain unchanged?

Markets move for two reasons- anticipation and surprise.

[Madison320]

I think by the end of 2023 the fed will want to be about 2 percent . There will be double digit inflation all yr this yr and still a lot of inflation next. So yes they have problems but the stock markets are grossly overvalued so they were going to dump at the end of fed purchasing regardless of rising interest rates probably.

I think the chance of this tightening cycle lasting until the end of 2023 is about .01%.

My guess is sometime this year they reverse course, set rates back to zero and launch and even bigger round of QE.

I'm getting another idea where this could go. I'm starting to think that the Fed might want to stop the idea that they are either on a tightening cycle or loosening cycle. It might be to their advantage to constantly flip back and forth from tightening to loosening. That way they could simultaneously ease the worries of inflation and a market crash.
They seem to be emphasizing being flexible and data dependent anytime someone asks them about what they are going to do in the long term.

[oyarde]

Ya , but the inflation isnt going anywhere unless they change some parameters to make it look better

[Madison320]

Markets aren't crystal balls but they are like betting lines in sports. They are the best guess based on collective wisdom and it is hard to outguess the wisdom of crowds.


Markets move for two reasons- anticipation and surprise.

I agree about the sports betting, but somehow I think there's a fundamental difference between markets and sports betting. With sports you are betting on a specific event with odds, with markets you don't even know what the event is. I have to think about this some more but I have a hazy feeling that sports betting and markets are different. If the Chiefs are favored over the Bengals by 7 we know that's the most likely outcome. If the Dow is 34K what does that say about the outcome? Does Dow 34K tell you that there's going to be 4 rate hikes this year? What exactly does Dow 34K tell you about future events?

Do you think the Fed is going to tighten monetary policy? Do you think they can tame inflation without crashing the markets?

[Krugminator2]

I agree about the sports betting, but somehow I think there's a fundamental difference between markets and sports betting. With sports you are betting on a specific event with odds, with markets you don't even know what the event is.

I think shorter term trading and sports betting are one in the same. I take the view markets are basically right but deviate from being exactly right based on too many people going to one side of the boat and tilting the line enough from its correct value to get small edges that way. But they don't occur often. This past week was a big exception and had once in year opportunities in stocks.

What exactly does Dow 34K tell you about future events?

My best guess for 1 year from now is 34k plus whatever the historical return is for markets. That is of course is going to be wildly wrong but I think that is the best guess and I have seen no evidence even from the best traders that they can do much better than that guess.

Do you think the Fed is going to tighten monetary policy? Do you think they can tame inflation without crashing the markets?

I have no idea what will happen and wouldn't even try to predict how that will affect markets. I think monetary policy is much too loose and that is going to have a negative effect somehow but the timing and path of prices before you get a negative consequence matter.