It’s now nearly a daily routine – Taper Tampering! One minute it’s on and the next it’s off… as though the economic data supports it one minute and not the next. The latest taper fear-inducing data was an unexpected rise in non-farm payrolls. In the month of October, non-farm payrolls came in over 200,000. If you listen to the media, this was a blockbuster number and cause for Fed tapering to begin sooner than later.
The news was said to be a major surprise, although numerous reports tell us the holiday selling season is beginning early this year. Some sales have already begun, Black Friday has become Black Thursday and across the country, Christmas displays are appearing much sooner than usual. But, I guess that has nothing to do with an accelerated holiday hiring season. Mix in lower gas prices and the markets seem to be buying into the story that the economy is improving and new-found disposable income, by way of lower energy costs, will rescue retail profits.
Just two months ago, on September 17, it was deemed almost certain the Fed would announce tapering measures. On September 18, the Fed shocked everyone saying it would not taper. Then taper talk crept back into the news reports only to be met by Janet Yellen’s assurance that she was prepared to continue the current Bond and MBS buying strategy.
So, while the Fed’s job has always been to tamper with economic liquidity, taper tampering is being brought to a new on-again off-again level. And the ...