Weil on Finance, P.M.: Handicapping Fed Taper

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Happy Friday afternoon, Viewfinders. And have a great weekend. Now on with the links.

Something is missing in this story about the Fed

Sometimes I flag stories because they are informative. Others I highlight because they are odd, such as today’s Page 1 article in the Financial Times about when the Federal Reserve might begin tapering its asset purchases. The headline in this morning’s print edition says: “Shutdown will not deter Fed from eyeing December taper.” The funny part about the article is that the writers don’t explain how they know this. All they say is that the Fed “could” start to taper in December. Of course it could. So?

Or maybe the taper will start in March?

A Bloomberg News survey of economists points to the Fed’s March 18-19 meeting as the likely point for starting to taper. But they’re guessing, too. Back in the days when Alan Greenspan was running the Fed, he used to love seeing dueling headlines in newspapers with diametrically opposite interpretations of what he had told Congress the day before. Maybe in spite of all the central bank’s jabbering about improving communications, the Fed still likes it this way.

Complacency is back, and the speculative-bond market shows it

Good piece in the Economist today about investors’ appetite for junk bonds: “Some observers think that the risks of high-yield bonds are being systematically underestimated. The spreads paid by high-yield issuers are low relative to the historical average, although they are more than sufficient to compensate investors given the low level of defaults. If central banks start raising interest rates to deal with a resurgence of inflation, or if the global economy slips back into recession, junk-bond investors may suffer a nasty shock. But for the moment they are enjoying the ride.”

The history of Twitter from doodle to IPO

Business Insider proves once again it’s very good at long-form journalism when it wants to be. I won’t spoil anything for you. Just make sure you have a good chunk of time set aside before sitting down to read this. It’s worth it.

Free grenades for all the kiddies

Did you know that during the early part of the 20th century after World War I the post office had a program to distribute hand grenades that had been converted into children’s savings banks? From the Liberty Street Economics blog at the New York Fed: “The children were loaned these hand grenade banks during their vacations in order to contribute to the War Savings Stamps effort. If a child saved enough money to buy a stamp, he or she was allowed to keep the grenade bank.” Good times.

(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)