Dude, Relax: Stanley Fischer Doesn’t See Any Risk Of Another Taper Tantrum
Well, I'm by no means sure that anyone cares on a lazy, post-holiday-weekend Monday, but Stanley Fischer was out this afternoon droppin' knowledge in a speech at Columbia.
If anything, his prepared remarks were notable for the taper tantrum references. Specifically, Stanley is pretty pleased with how stocks have held up in the face of rampant speculation about the pace of Fed balance sheet normalization.
“My tentative conclusion from market responses to the limited amount of discussion of
At this stage of the game I will be pleasantly surprised that the fed will reduce its balance sheet.
I am more inclined to believe that a year from now it will be closer to 5 trillion and the national debt will be 22 trillion.
And what percentage of our GDP is that? As if anyone really cares, we will still be the best game in town!
It is clear that I am not seeing the big picture,…… This is all insane!
theres a lot of hype, it appears to me, regarding this rolloff. from the charts above it seems, at worst, in a given month we’ll see $50B, in a multi trillion $ market. along with all this handwringing, some perspective as to MBS origination levels might be helpful. this is a big distraction. and if you want to dwell on this, review doug caseys charts on the actual effects of QE. when QE rounds occurred, rates went up. when they stopped, money stopped flowing in STOCKS, stock market got weak, and rates went down along with talk of another QE. apply this to the unwind process and we’ll see rates climb into the begin of tapering, then fall as it is occurring–likely due to effects from the performance of risk assets.