Software & Finance - Monthly Magazine Online

Volume 4 - Issue 1

January 2014

Fed Tapering to be negative for Stock Market

Dec 18, 2014 - When Fed Chairman announced that Fed will start Tapering by 10 billion US$ per month. So the current level of 85 billion US$ will get reduced to 75 billion US$. Of course it shows the confidence in US economy.


If you watch the leading indicators such as long dated US Treasuries started moving higher. It shows the well knowledged investors are liquidating their long positions in the stock market and moving onto treasuries. The reason for the stock market rally after the Fed announcement is nothing but inital euphoria. It will soon fade and will take the market down at least 15% before spring 2014.


Since Fed Tapering is fully priced into greenback and gold, we can see dollar moving lower besides it will push the gold prices. Gold prices and Gold miners suffered the most compared to all other sectors in 2013. When the new year begins, Gold prices and Gold miner will enjoy the siginificant bounce.


Fed bond buying programme and keeping the interest rate near zero for more thna 4 years triggered credit bubble. How big is the credit bubble and the severe impact can be seen once after it bursts.


How 2013 is very good for the stock market, 2014 would be very bad for the stock market. Stick on the Gold to protect your asset since hyper inflation is also likely during 2014.