What Are the Chances of a December Fed Taper?

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Dec. 17 (Bloomberg) –- Russell Investments Chief Markets Strategist Stephen Wood discusses the Fed and when tapering may occur with Olivia Sterns on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Joined steve wood.

According to the latest survey from bloomberg tom a one third of economists, 34%, think the fed will start to taper tomorrow.

Do you think that they will?

I would not be in that camp.

March is still the highest probability, but the fed is going to surprise the market, as insinuated in may, and the market really piped in that paper and they did not actually taper.

I think that is pretty sufficient right now, i think they did some damage to their credibility for the future.

It could happen during the december meeting, but i think it is unlikely.

I think a new chairperson will be coming in with janet yellen and will -- janet yellen and what she wants to have happen could be good for her.

We spent so much time talking about will the fed taper or not, but the conversation may be should be about is should they start to taper.

Do you think the economy and recovery is strong enough that we have reached escape velocity?

A fascinating question.

I would say my opinion is not that relevant.

What i need to do is assess the fundamentals.

I think that the fed is probably going to start to taper in march.

From the calculation and methodology that they are using, the economy is probably strong enough to withstand the taper.

We would not assume that they could withstand the removal of stimulus, and certainly a rate hike would increase the fed fund rate.

Maybe even in the first quarter of 2016. they are going to dial down the medication, but still leave the patient in the hospital.

When you look at the big jobs number from earlier this month, the headline number fell, but then a lot of people were dropping out of the race.

Kind of like good cholesterol, bad cholesterol.

Why did the unemployment rate come down?

R shall be good reasons, partially for not.

I think that the improvement in the labor market is real, consistent, but not brisk.

It is a glacial improvement, but i think housing is a strong point.

I think that what will happen between this year and next year is washington is going to stop pumping the brakes, so that fiscal deceleration, the budget deal, the debt ceiling, you know, the fiscal cliff, that will be removed and it will take the economy from a 1.6 to closer to three percent next year, which should give the fed more confidence.

If the economy picks up as you think, where are you placing your big bets for 2014? look at what will be unattractive, like cash bonds.

Looking in the equity space we think the market is going to be fairly valued, not cheap, but not rich either, more stock the king security selections sector by sector, name by name, with valuations in europe still being attractive.

I think that for more disciplined investors they will need to look for more market.

This text has been automatically generated. It may not be 100% accurate.


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