3 Reasons Why The Fed Will Not Taper in in 2013

We do not think the Fed will taper in 2013 and here’s why:

1. Neither of the Fed’s targets have been met:

A. Unemployment rate drops below 7%

AND (not or)

B. Inflation rises to 2%. Actually, one could argue that deflation is more of a concern right now than inflation.

2. Yellen’s In, Bernanke’s Out:
Another reason is that Janet Yellen is expected to take over in January and she is a big proponent of QE. So, from our point of view, the likelihood that the Fed tapers in December is not very high.

3. Shop Till You Drop:
Finally, the Fed knows that the Q4 shopping season is very important for the overall economy. If the Fed were to taper a few weeks before Xmas, that would surely hurt sentiment, stocks, & the economy. Based on everything the Fed has told us, we highly doubt the Fed will go out of its way to hurt the economy right now.

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