Skip to comments.Fed Sets October End for Bond Buying
Posted on 07/10/2014 6:21:44 AM PDT by Java4Jay
Federal Reserve officials agreed at June's policy meeting to end their bond-buying program in October, putting an explicit end date on the experiment for the first time and closing a controversial chapter in central-banking annals with results still the subject of immense debate.
(Excerpt) Read more at online.wsj.com ...
I can quit anytime. Just let me have one more shot for now...
So we have a certain date on which the market will tank?
Sounds like it to me. Be out of the market by October, or loose big time!
So they won’t be spending 30+ billion a month anymore trying to paper over the national debt with phony e-money anymore. Go figure. I’ll be they add that amount to the 4050 billion they’ve been spending per month buying MBSs on the stock market.
Anyone wondering why the stock market is impervious to the recession - this is the reason. Greed and they’ll get theirs and don’t care about the future.
This way the inevitable crash can be blamed on the Republicans who will have kept the House and just retaken (I hope) the Senate.
Lose not loose for you spelling rats.
putting an explicit end date on the experiment
Strange “coincidence” indeed. Whatever, with the Fed and all agencies of the government its not always what they say, its what they do that matters. Words are cheap, and the gullible sheeple usually buy them.
The Fed could easily backtrack by claiming “softness” in the economy or some other excuse. We’ve seent his movie before.
It’s all been planned, bozo’s job has always been to destroy America. He just held off until after his reelection to ensure he had carte blanc to bring us all down. He wants a brown country-that is what he is all about-revenge and destruction of the most glorious republic to ever exist!
Anyone wondering why the stock market is impervious to the recession - this is the reason.
Yes, the Fed is behind this levitation. No doubt about it.
If the business environment is so healthy and the economy is so strong then why has the Fed found it necessary to print trillions?
You’re not suggesting that the Fed is political, are you? ;)
DISMANTLE the FED
In a nutshell, the FED is paying the NYSE to look the other way.
Wonder if this has anything to do with the price increase in gold and silver since very early June?
All hell breaks loose AFTER the election.
At least the Bank of Japan is straightforward about it’s manipulation of markets:
IMHO we will see an invasion and it won’t be coming from the South. You got to remember that this country still has the largest natural resource base in the world, we are just not allowed to tip it. This land is the prize, worldwide.
Higher interest rates just might help local economies long term. Responsible people will be able to accumulate savings for the future. Seniors whose savings haven't been decimated by gov "help" through the recession will mostly spend any interest they get, a lot of it locally. Banks will be more willing to loan if they'll earn a profit from it.
People who are STILL in debt? Not my problem. QE going on any longer?....the longer it goes on, the less reversible its effects on the economy will be.
Muzzies are big on symbolism. Remember the date of the market crash that led to the Great Depression?
OK all you Freeper Finance guys. What should we do with our money?
Do we keep it in Stocks?
Do we move it to Bonds?
Do we put it in fixed income money markets?
Do we put it in Real Estate Equity?
Do we move it to foreign investments?
Help us out here.
When will the Fed start selling the Trillions $$ that they already have sitting on their balance sheets ?
2- The ECB and Japan are expanding their money printing.
I imagine that the biggest result will be in the bond market; but I will not hazard to guess in which way.
They have been propping up government bonds, but has this taken investment funds away from other bonds; or has it artificially inflated the bond market that will now correct?
Bonds are an oddity, because as their price drops, *typically* their yield rises. However, if their price drops and their yield does not rise, it may cause a stampede out of bonds.
Commercial, taxable yields are more volatile, and market driven; and tax free municipal bonds are more stable, and based on the ability of cities to build new infrastructure. And because muny bonds are often medium and long term, even cities with financial problems continue to pay yields on them, so as not to destroy their credit.
After that it’s Orange Juice and Chocolate bars.
BS. The FED can’t stop creating money. There is no one to buy $1 trillion a year in US debt.
This will be a smoke and mirrors psych opp. Proxy buyers of Treasurys. Maybe Belgium will move up to be the biggest buyer. It already somehow holds over $400 billion. Not bad for a country with a 2013 GDP of $482 billion. /sarc
Every blade of grass.
That's the dilemma, isn't it? Should I move my investments out of bonds (which have been doing quite well lately) and move them to something like a money market fund?
Should I let my large and small cap investments ride? Should I move in or out of equities? Or is it just something no one can predict?
The Fed policies have led to Hot Money going to the Stock Market because of no returns anywhere else.
For certain now that interest rates will go up.
The Hat trick will be the Fed trying to unwind their Bond Portfolio now at about $5 Trillion bucks.
Truthfully, I sincerely suggest what I have been suggesting for some years now: to keep a significant amount of cash, perhaps $5,000, in a secure place at home.
It’s most important element is that you have complete control over it at all times. Unlike a bank deposit, withdrawals cannot be “halted” by the government, or the bank itself. (Just a year or two ago, the rules were changed so that even “demand” accounts are no longer safe.)
It cannot be savaged by any kind of “currency run” on banks. (N.B.: there is only enough physical currency to support 4% of US daily retail trade.)
And paper money and coin cannot be hyperinflated, as such, because there are only two US printing offices, that already work around the clock producing mostly $1 bills, and proportionately fewer higher denominations. So they cannot produce *more* money, and there are not enough $20, $50 and $100 bills to support even a $500 denomination, much less a $1000 denomination.
So the weird situation might exist of hyperinflation in virtual money, and hyper-deflation of physical money, at the same time. That is, *starting* with a nickel being worth a dollar, rapidly becoming a penny worth a dollar, then a penny worth ten dollars. While at the same time, virtual money becomes worthless, because no one will accept it.
The biggest twist here is that physical money is legal tender, and virtual money is not. So creditors *must* take physical money, but they can refuse any form of virtual money. So pay in cash, or nothing.
The final blessing of having cash at home is that if there is an economic disaster and massive inflation affecting all currency, you can spend it immediately.
I'd probably work out an arrangement to share the profits with the driver, and I'd have GPS tracking installed to keep the driver honest.
If I had big bucks to invest I'd be looking at the nation of Panama (in fact, one of my own aspirations is to open an office there).
hmmmm, sounds like I should get out of everything.
And get a 1% CD. yippee!
Does anyone really think the Fed will take away the punch bowl?
Does the Fed really want to crash the market back to 13.5 by Christmas?
The Fed has hooked Wall Street on free meth/money and if the junkie goes cold turkey, he's gonna be real real sick.
Plus, does anyone think that Barry's boys will let this happen on Barry's watch and send a weak economy into big recession?
Nope, nope and nope.
The Fed as pusher is here to stay for a long long time, until something outside blows the whole rotten scheme up.
This is a play at the 2016 elections. Crash the economy (well, it is really dead, this just removes the life support)right before mid terms and blame it on the TEA party conservatives.
In two years, proclaim an emergency of some sort and the game is over.
Well if the crash is inevitable we can all get fabulously rich like John Paulson and laugh at everybody.
Just tell me when to load up on shorts and puts!
“This way the inevitable crash can be blamed on the Republicans who will have kept the House and just retaken (I hope) the Senate.”
i’ll take it
“And paper money and coin cannot be hyperinflated”
I thought that was the basis of hyperinflation, and the stories of paper money in wheel barrels during the weimer republic?
I hope you are right.
Inflation cuts across numerous commodities and assets. So if you move to cash now - then commodities / assets should drop in price - you can reinvest opportunistically.
I'd say ammo is always a safe bet - keeps you safe, fills the freezer, and needs to be replaced due to consumption...
Fed already plans to regulate banks to have more liquidity, i.e., buy government bonds...
So as the Fed has bought up all the more valuable private sector bonds, banks will be forced into buying freshly printed government bonds.
Private sector will be bilked again.
This may not be a short term problem from the fed. Obviously we were doomed to collapse from all the decades off deficit spending. The Question is just how soon will hyper-inflation occur? yes, it is best to get out of everything in the market right now and wait for at least a ten percent correction. In private I will tell you a stock to buy.
need to communicate. ASAP. PLS.
It’s easy to guess which way an interest rate increase might effect the market. The market will NEVER jump up at the sight of such an event and it’s long overdue for interest rates to be a bit higher, more like 5-6% for home loans and 12% for car loans. US bonds need to be 3-4% at a minimum and more like 5-7% to be sustainable.
For at least 3 decades my largest holdings have been tax exempt muni bond funds where the funds hold general obligation bonds exclusively. I prefer knowing that the local folks have voted on it and are backing it. These funds took a hit in 2008 along with everything else but only around 20%, not the 40+% that most other stuff took. We took another hit in 2011 when Meridith Whitney shot her mouth off about muni bonds in general without being specific about GO types.
There are plenty of those funds that pay over 6% tax exempt. If your concern is the interest rate increase that is bound to happen about Oct. when the Fed turns loose then you need to be light on any other funds that are interest rate sensitive. But the tax exempt munis will do just fine. Even if they drop with the market they will still pay just fine and if the general market corrects you will get a chance to buy some more paying a higher rate——using the cash you should be sitting on at the time.
Keeping some cash in the freezer is always good advice but keeping your portfolio simple is even better. And if you’re not making at least 6% tax exempt you’re just not paying attention, especially if you have other income that is exposed to a tax rate. Works for me and I will indeed be paying close attention as we close in on October.
There is right now more liquidity than can be handled. The banks have about $1 Trillion plus parked at the Fed.
If the Fed tries to unwind their portfolio the buyers may very well be the banks.
The reason the Fed has bought all that paper is to try and control Interest rates for Treasury Debt.
Any spike in rates, say 80 to 100 basis points, will add another $100 TO $200 Billion to the Interest cost in the Budget and before long all Tax revenues will be going to pay that cost.
The Fed has boxed themselves in along with the rest of us.
I don’t think they will do it. Not right before the election.
The stock market's already priced in the October end. (At least that's what I've read from all the "experts." Who really knows what's gonna happen .....)
how long does it coast on whats already been printed?
#24 Child of the 60s,
You have it! The _Reserve_ pretends to stop floating the system as other places like Belgium pick up the slack. This is just covert _Reserve_ activity and it will contunue floating the sinking boat thru any means possible. This included bailing you into. Coming soon to a USA near you.