The little Clown Car zoomed over to the 3rd ring and 3 clowns popped out at once and entertained the audience with Taper talk rising: next week may actually be it (Bullard), Fed’s Fisher backs taper at earliest opportunity and Fed’s Lacker: Taper on table in December. “Clowns” may be a little harsh; these gentlemen are actually the 3 bad cops we have talked about in the past. Trot ‘em out in the media when the Fed wants to paint Hawkish perceptions?
Now can we please get on with it? If Bernanke and Yellen dare roll over this time it would show that Fed members are just getting in front of microphones and spewing their disparate views. I don’t know about you but I’d rather think they are coordinated and on some kind of coherent plan.
The funny thing is that it is not like they will be tightening policy. If they actually begin a bond buying reduction regime, all they will be doing is changing the dynamics of the inflation operation.
The question I have is whether the countdown is days, weeks or months. If it tops out in days or weeks I’d expect a topping process that could take the majority or all of 2014. If it accelerates for the next few months to what looks like a parabolic (silver-like) blow off, then the top could take the form of a sharp reversal. Either way risk vs. reward is no good on the US market. I write this as someone still playing this thing, but with eyes open.