On the Fed’s tapering and the volatility in Japan

Yesterday, Ben Bernanke said that the Fed would start to wind down its QE program sometime this summer as I indicated early last week I believed the timetable would be. Market pundits believe these remarks triggered a sell-off in global equities, with Japan being hardest hit as the Nikkei fell 7.3% this morning. I was more concerned about the poor Chinese PMI print. But if the pundits are right, it is an extraordinary move into risk-off thinking given that the Fed had telegraphed its intentions. This incident shows you how the Fed's exit path is fraught with risk. Japan is another story altogether.
Early this month, I noted that the data started to break a bit to the downside and wrote my daily commentary saying that as the US economy stalls, the Fed’s timetable is getting pushed back. Sin...


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