In this week's Off the Cuff podcast, Chris and Mish discuss:
- The Fed's Taper "Lite" Surprise
- $10 billion less per month going forward
- Social Instability Due to Growing Wealth Gap
- The pitchforks are being sharpened
- Un-representative Democracy
- Our leaders no longer work in our interests
- Beating Cancer
- Mish' happy health news
Well, the Fed surprised the world today with the announcement of a low-intensity taper. It will reduce its monthly asset purchase program from $85 billion/month to $75 billion/month ($5 billion in reduced mortgage purchases, and $5 billion less in Treasury bond purchases).
How did the markets react? With glee.
Stocks up huge. Bonds bid solidly.
But, as usual, the precious metals fell.
Paper assets powered higher as Ben Bernanke, in his last press conference as Fed Chairman, explained that asset purchases and related liquidity measures were likely to continue for a long time. So even though the $10 billion/month reduction will go into effect, markets are now more confident that the Fed's punch bowl will continue to serve up high-proof liquidity for years to come.
Of course, an economy that still needs $75 billion of injected stimulus a full 5+ years after 2008 should be a source for concern. But not in today's bizarro, self-delusional, everything-will-be-awesome-forevermore markets.
by oliveoilguy