Thursday, December 19, 2013

Fed to taper bond buying by $10 billion a month

The Federal Reserve announced Wednesday it would start to taper its aggressive bond-buying program to $75 billion a month beginning in January, propelling the market to a record close.

The FOMC also announced it would lower its monthly long-term Treasury bond purchases to $40 billion and mortgage-backed securities to $35 billion a month, both reductions of $5 billion.

"I think it logically, this is what they had to do," said David Kelly, managing director at JPMorgan Funds. "If you look at what's happened this year, the unemployment rate has come down to 7 percent. We've got housing starts over a million units. We got the S&P 500 up 25 percent. In this economy, you have to pull back from the most extreme monetary policy in a century. So I think it's overdue. I'm glad to see it."


Nine of the voting members of the FOMC supported the decision to start tapering. Only Boston Fed President Eric Rosengren dissented, noting the elevated unemployment rate and inflation below the 2-percent target.

Bernanke said in his final news conference as Fed Chairman that the recovery remains "far from complete," but if jobs gains continue as expected, the bond purchases would likely continue to be cut at a "measured" pace throughout next year.

Bernanke said he consulted closely on the decision with incoming Fed chief Janet Yellen.

"She fully supports what we did today,'' Bernanke said




Markets had first expected tapering to begin in September, and then began to shift their focus to December—or even later.

Ken Volpert, principal at Vanguard, predicted the Fed will taper by $10 billion.

"What we're going to see in 2014 is reasonably good growth," he said. "We don't have the fiscal headwinds, or the fiscal drag as much in 2014, and we do have, you know, the deleveraging cycle, the consumer is getting towards the end. And so we are going to see some reasonably good growth, and I think the Fed is looking at that as well."

Bob Doll, chief equity strategist for Nuveen Asset Management, called it "good news for equities."

"The Fed is finally signifying to us the economy is doing better," he said. "2014, the economy will be a bit stronger, a bit broader and this is just confirmation of it."

Major averages shot higher following the announcement, with the Dow skyrocketing nearly 300 points. Both the Dow and S&P 500 closed at record highs.

In updated quarterly forecasts, the central bank pared back its expectations for both inflation and unemployment over the next few years, acknowledging the jobless rate had fallen faster than expected. It now sees it reaching a range of 6.3 percent to 6.6 percent by the end of 2014, from a previous prediction of 6.4 percent to 6.8 percent.

Tangible job growth has been at a focus of the central bank's policymakers. In November, U.S. employers added a better-than-expected 203,000 jobs, with the unemployment rate dipping to 7 percent. The Fed has previously said it is looking for a 6.5-percent unemployment and 2.5 percent inflation rate before implementing an exit strategy from its $85-billion-a-month bond-buying program, also known as quantitative easing.

After nearly eight years, Ben Bernanke is stepping down as Fed chairman early next year. His designated successor, Vice Chair Janet Yellen, faces Senate confirmation this week. Yellen is known to lean dovish in her stance—favoring easy policy like Bernanke—which would likely bode well with markets.

This is the third round of QE since the financial crisis of 2008, and many investors believe that QE is the primary reason stocks have rallied since bottoming in March 2009.
The Fed posted a revised statement after noticing a minor error in the original version. However, there was no indication that the error affected the balance of the news.


Source/Extract/Excerpts/来源/转贴/摘录: CNBC
Publish date: 18/12/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
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每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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