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Can you possibly explain a little more? From my research [1] the fed tapering off looks good for business as stocks skyrocketed according to the article [1]. Pe

by winslow 13y ago

Can you possibly explain a little more? From my research [1] the fed tapering off looks good for business as stocks skyrocketed according to the article [1]. Personally I think it is good the Fed is tapering off and starting a slow transition (note: I have libertarian views hence less gov't involvement the better). Obviously, I am no expert, maybe someone can explain why it's bad other than the market might not being ready? [1] - http://www.cnbc.com/id/101282912 http://www.cnbc.com/id/101282912

fragsworth 13y ago
I don't think he can explain more. He's basically predicting the stock market without any insider information.
- Tloewald 13y ago
  And he's basing it on macro which is even more random.
jjoe 13y ago
Fed tapering means there's less liquidity in the markets. That's because they're buying up less risky assets off the financial institutions. Less money in the market means less "free" cash available to be loaned up for risky investments. I wrote a little about this in this submission: https://news.ycombinator.com/item?id=7172139 https://news.ycombinator.com/item?id=7172139 Of course I can't predict what will happen but it's very clear that less money always means less money. A lot of businesses rely on bank loans to make ends meet with regards to payroll. This might not apply to Dell but it applies to a lot of small business owners who need the extra help until they get paid by their clients and then pay off the short term loan. Stricter payroll loan policies (when money is scarce = bank reaching low levels of liquidity) puts businesses in tough situations leading to sudden layoffs. The Fed's goal is to try and regain control of the system (they lost control last summer). So by tapering they're shaking the tree. Just like you'd put an electrical signal through a black box and study the output in an attempt to understand how it works, the Fed is gradually cutting its $85bn per month supply of "cash." That's what the Fed (Yellen) is doing right now. I'm sure they'll react if things degenerate too much. FYI, it's a carnage in the financial markets right now. Dow was down several hundred points in Jan. Several hundred points just today.
- jonknee 13y ago
  ... Except the Fed is mainly buying Treasury debt. It actually encouraged loaning out for "risky" investment by pushing down interest rates. That's why there's the fear in emerging markets as the program winds up.

by winslow 13y ago

fragsworth 13y ago

I don't think he can explain more. He's basically predicting the stock market without any insider information.

Tloewald 13y ago
And he's basing it on macro which is even more random.

jjoe 13y ago

Fed tapering means there's less liquidity in the markets. That's because they're buying up less risky assets off the financial institutions. Less money in the market means less "free" cash available to be loaned up for risky investments. I wrote a little about this in this submission: https://news.ycombinator.com/item?id=7172139 https://news.ycombinator.com/item?id=7172139 Of course I can't predict what will happen but it's very clear that less money always means less money. A lot of businesses rely on bank loans to make ends meet with regards to payroll. This might not apply to Dell but it applies to a lot of small business owners who need the extra help until they get paid by their clients and then pay off the short term loan. Stricter payroll loan policies (when money is scarce = bank reaching low levels of liquidity) puts businesses in tough situations leading to sudden layoffs. The Fed's goal is to try and regain control of the system (they lost control last summer). So by tapering they're shaking the tree. Just like you'd put an electrical signal through a black box and study the output in an attempt to understand how it works, the Fed is gradually cutting its $85bn per month supply of "cash." That's what the Fed (Yellen) is doing right now. I'm sure they'll react if things degenerate too much. FYI, it's a carnage in the financial markets right now. Dow was down several hundred points in Jan. Several hundred points just today.

jonknee 13y ago
... Except the Fed is mainly buying Treasury debt. It actually encouraged loaning out for "risky" investment by pushing down interest rates. That's why there's the fear in emerging markets as the program winds up.