The Stock Market Is Daring The Fed To Taper


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After last week’s meeting, it seems clear that the Fed is very likely to start tapering its asset purchase program later this year. It simply may not matter how strong the over the near-term are, as long as they show that the trend is getting better; the pace of the improvement only delays the inevitable.

The market has grown so focused on short-term headlines that it may be losing focus on the long-term outlook, which is QE from the Fed will likely end, even if the economy slows more. Add to this some grumblings from a few ECB officials that would suggest the discussion around the ending of QE in Europe may not be too far away. The two QE programs together make up more than $200 billion in asset purchases per month, which means global equity markets will be losing a lot of easy monetary accommodation in the months ahead. Yet, the equity market in the US seems to be ignoring the risk of this…

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