The highly regarded Art Cashin commented on the announcement coming from the Federal Reserve that it would not begin “tapering” its bond buying this month.
The financial media has joined the trading community in speculating about possible damage to the Fed’s “credibility” from its no taper decision. The question is based on the process. In late spring, Mr. Bernanke floated the idea of gradually reducing the Fed’s QE purchases and, ultimately, ending the program – possibly as early as the middle of 2014. In the following weeks and months, various FOMC members (voting and non-voting) opined on the matter. The collective impression was that tapering would begin by yearend (and before Mr. Bernanke’s term ends in January). The media odds-makers generally moved toward September as the likely start. Instead, the FOMC opted to stand pat in September. Shocked markets around the world reacted violently. If the Fed was moving toward a delay of tapering, why was there no intervening “guidance”? Traders now speculate that the FOMC may have made up its mind at the meeting itself. If so, was there some last minute economic data or development that moved the FOMC away from a decision that was broadly expected by markets around the globe (as demonstrated by the sharp and sudden reactions that followed)? That could make the Minutes of the meeting very enlightening – unless they are heavily laundered. We await with great anticipation.
And here’s a brain teaser:
An ancient Roman Puzzle – “Start with five hundred, end with five hundred just five in the middle will be. Between them shall be a first of numbers and of letters to give ye the name of a great king.” Who is it?