Posted by on Nov 4, 2013 in Commentary, Featured, Market News


We reach yet another stalemate as the dominance of the central banks in the currency markets continues after the latest FOMC meeting. The continued manipulation of interest rates through quantitative easing continues. A growing economy being primed by $85bn of money every month, or $1 trillion annually.

The FED has on numerous occasions hinted at tapering, but keeps shying away from taking the plunge. It could signal a readiness to reduce the stimulus and avoid the continual back tracking by reducing the stimulus to $80bn a month.

In the overall scheme of things, I hardly think a $5bn reduction would make much difference. Politically, it would signal that tapering has begun and move the discussion forwards to how much and when, rather than if. It has to happen. Given the economic growth and the strength in the US stock markets (new all time highs), sooner would appear to be better.

As for the government shutdown, the can has been well and truly kicked down the road again until the beginning of next year. We can look forward to more uncertainty and the political horse trading resumes and the biggest economy in the world stumbles on to yet another fudge.

Before the latest “settlement”, I said to a group of traders that a solution would be found and the US government would not be allowed to default. That is a given. The only issue in doubt is the political damage. The US seem to be pretty good at inflicting that on themselves.