Happy Monday all! This week will be interesting as we are facing the first potential 3-week losing stretch on the S&P in 82 weeks… and the FED reports Wednesday afternoon with what could be the dagger (taper announcement) to solidify this drop.
I think there are solid narratives on both sides of the aisle for why the FED will or won’t taper. Many seem too confident they will taper due to recent improvements in economic data. This is setting up like a repeat of this summer/fall when everyone was surprised there was no taper even though inflation expectations fell drastically in the run-up to the “no-taper” press-conference. I’m in the boat of 60/40% for No-Taper/Taper. If we do see a taper, I believe it will come with some sort of caveat to keep things super loose and (hopefully) push inflation.
- Largest reason I don’t think we’ll see a full-on taper (Bloomberg)
- Great technical overview of the market (Fat Pitch)
- The FEDs are joining the floating-rate party (Sober Look)
- Dr. Ed takes another look at valuations (Dr. Ed’s Blog)
- Industrial production now above 2007 record (Calculated Risk)