Fed softens pandemic support

As always, some wise and thought-provoking words from Howard Marks. Particularly after the conclusion of yesterday's FOMC meeting, in which chairman Powell announced the onset of tapering, as well as the "appropriateness to be patient" on raising rates. This dovish tone comes hardly as a surprise and was expected by market participants. On the grounds of their transitory view of inflation, one interesting thing changed between this most recent meeting and the last FOMC meeting. They now state heightened inflation as "largely reflecting factors that are expected to be transitory". However, at their last meeting, they reported it as a symptom of "transitory factors". Got to love the minutiae. It Will be interesting to follow up with the Fed's public statements on their inflationary stance if pressures insist.

Get ready for tapering: the Federal Reserve said Wednesday that it will wind down its bond buying program, Barron's Lisa Beilfuss reports. What do you think of the move? https://lnkd.in/eAKTeJxJ

It’s taper time!?The long-awaited day has finally arrived and #Fed Chair Jay Powell didn’t disappoint. He stressed that policy will adapt to how the economy evolves, meaning the taper could speed up.?But he also made it clear that it’s appropriate to have a patient stance.?Finally, Powell once again successfully underscored that rate hikes have been “consciously uncoupled” from tapering (credit to Gwyneth Paltrow for creating this phrase).?This is critical for markets.

Jerome Powell has decided to drink hot blood and do the bitter business of paring back the Fed's bond purchases, a process known as tapering. You'll recall that many Fed watchers have been hectoring the mauve-tied central banker for months to announce his tapering plans; which is how we got announcements like the Fed was considering a future discussion on the topic. Now that the day has arrived, expect the commentariat to cast their eyes forward to when the Fed might raise interest rates. You can only be sated for so long. The Fed has a difficult job: inflation is running much higher, for much longer, than they said it would, but the jobs picture has not fully brightened. Don't expect higher interest rates until millions more are back at work and the supply chain crisis isn't causing empty grocery shelves. Moreover, it's not exactly clear that increasing borrowing costs in the near future will do much to bring stuff more closer to normal. Powell's widely earned positive marks for his handling of monetary policy in the time of Covid, but it remains to be seen whether President Joe Biden will nominate him for another term. In any case, we at Forbes Advisor are looking out for you, and can thankfully report that all of this talking about tapering has so far, at least, not resulted in an investor tantrum as in 2013.