NO Early QE Taper Redux… ECB & Ice?

Two more reasons the Fed won’t taper until March

…Europe and... Weather?

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COMMENTARY: Saturday, December 7, 2013 Weekend Read

To channel former US President Ronald Reagan, “There you go again.” That was his response when ex-President Carter laid out the typical Liberal Democratic answers on key issues in their 1980 debate where Reagan was looking to shift the paradigm. We feel the same way on the broad range of economic commentators who seem to feel every piece of good news will accelerate the Fed QE taper into December 18^th.

Possibly that’s a good window due to the accompanying economic projections revisions and press conference. At least it will recquire Mr. Bernanke to explain why the QE taper did not occur if the Fed chooses to demure once again, as we suspect it will. Of course, it will also allow Mr. Bernanke to explore the myriad reasons (or excuses) the time is not yet right.

One new aspect which has cropped up in the past week is whether the Fed will have trouble tapering while ECB is pushing more structural reforms after seeming more accommodative on that surprise November rate cut. Radical thought? Well, we consider the source in an earlier interview to be very well-informed: Praxis Trading’s Yra Harris, who also feels Janet Yellen is a moderate. More on that below.

Yet what do we also see within the second positive US Employment report in a row? More good excuses for the Fed to NOT taper QE prior to Janet Yellen’s first meeting as Chairman in March.

And this one is not news. A very well-informed discussion of how and why the Fed goofed in tying any thoughts of QE tapering to the headline US Unemployment Rate is explored in a another interview. This one is also a bit dated, having occurred in the wake of the November 8^th US Employment report release. Yet it is still useful in highlighting the degree to which the Participation Rate must be another key factor in any overall Fed assessment of the US economy.

Just click on the video to see Rick Santelli's discussion with Jim Bianco of Bianco Research. One of the most interesting aspects of their discussion is the significant number of more relevant metrics that the Fed might be able to use to determine the real state of US employment strength. The Participation Rate is troubling, yet less than instructive due to the degree to which its lower numbers are significantly tied into the generational shift as the Baby Boomers retire.

And then there are the other factors of whether Janet Yellen is actually a moderate, and might there be some other global central bank development that the Fed is waiting on to potentially assist the timing of their QE taper?

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