Category

QE Taper

The Fed

The Best Investments Before the Fed QE Taper

Our inbox has been filling up with one big question from investors: "What are the best investments before the Fed QE taper occurs?"

The answer to this question has just altered dramatically, and here's why.

U.S. President Barack Obama yesterday (Wednesday) nominated U.S. Federal Reserve vice chairwoman Janet Yellen to replace Ben Bernanke as Fed chief.

Here's what to expect, so you can start planning ahead...

The Fed

BREAKING: Bernanke to Continue Controversial Bond Buying Program

Fed Chairman Ben Bernanke announced in a press conference this afternoon that the U.S. Federal Reserve will continue quantitative easing, the controversial bond buying program, for now. Chairman Bernanke expressed concern over rising borrowing costs and their effect on the economy, saying that the situation calls for continued quantitative easing.

Analysts on and off Wall Street were surprised, to put it mildly. Markets responded very well to news of continued easy-money policy. The mainstream consensus was that the Fed would begin to taper off its $85 billion monthly bond purchases by around $10 or $15 billion each month. Current pricing just didn't take continued bond buying into account, and the bullish reaction was immediate, intense, and widespread.

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Top News

QE Taper Talk and the Stock Market

Investors next week will be waiting for one key piece of info from U.S. Federal Reserve Chairman Ben Bernanke and the Federal Open Market Committee (FOMC) meeting: Will the QE taper begin?

It's been exactly one year since the Fed announced QE3 – also dubbed QE Infinity, with no clear idea of an end date given at the onset. The Dow Jones Industrial Average has climbed 14.9% in that time, and the S&P 500 is up 17.25%. Since the first round of this last series of quantitative easing started in December 2008, the indexes are up about 73% and 92%, respectively. The fear now is that if the Fed stops buying and rates begin to move higher in the months ahead, money will leave the market as quickly as it piled in and cause a prolonged selloff that drives down share prices.

Fed officials have been dropping broad hints that tapering is coming sooner rather than later.

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Emerging Markets

How the Fed QE Taper Will Affect Foreign Markets

Hints from the U.S. Federal Reserve this week that the quantitative easing (QE) taper is near pushed the Dow down 105 points Wednesday – but the idea of less Fed stimulus has caused much more turmoil in certain overseas markets.  

The problem: A corresponding hike in U.S. debt yields has fueled higher borrowing costs around the globe. This has led to the flight of cheap capital out of emerging currencies and markets.

That triggered the following reactions: