Monthly Archives: June 2013

Today, 2 pm: possible clues to the big market mystery revolving around the word “taper”:

“In the last month alone, the words ‘federal reserve’ and some form of the word ‘taper’ appeared in 1,923 news articles in the Nexis database (the number was 12 in the same period last year)” (link is here).

“The taper caper,” as all stock market sleuths know, is the mystery of whether/when Ben Bernanke will taper off the rate of bond buying, down from the current $85 billion a month. (See my last rejected post.) Investors, traders, and especially trading robots who run the market, are on hair trigger alert for clues from Bernanke today. “And the word on everyone’s lips on Wall Street all morning will be ‘taper‘”. With hints Ben will be departing in 2014, the drama is raised a notch, but the band of (mostly) day traders here at this NYC meet-up are playing it cool…. Tune in later.*

*2:30 pm: Big applause erupts here and doubles of Elba Grease all around!**

**3:15pm Oh-oh…things are good enough to start t-a-a-pering soon, but not right away…oh like it’s a big surprise…topsy turvey coming…buy bonds?

3:20: Mayo departs for furniture shopping at the NY Design Center…***

***5pm: Mayo checks market: Oy, (major plummet!) see what I mean (about topsy turvey)? Glad I bought those tapered bookcases (in ebony macasa). At least they offer something concrete!

Now tomorrow, it will be said the robots overreacted…

What a topsy-turvy game playing the stock market has become. In the past (don’t ask me how far) signs of a strengthening economy would point to the likelihood of stocks rising, now it is the reverse. (At least at current, in the short term). As soon as reports are out showing even marginal improvement, the fear that Bernanke will begin to taper the huge monthly bond purchases leads the stock market to plummet (like yesterday). Every time he whispers, let alone speaks, about easing out of the “easing” at some future point, the market drops precipitously. It’s almost as if traders don’t want the economy to start recovering too much, lest Ben stop the feeding. With interest rates low, companies borrow to buy back their own shares, keeping their prices afloat. I’m sure there are other theories, and I’m not any kind of expert[1]—just an outsider, playing from the sidelines. The other strange twist is that the game nowadays has much less to do with predicting the economy or human psychology, than with figuring out the “psychology” of the high speed computers that run the markets. What words would be frequently out there in the news today to trigger the programs to buy/sell (at 2p.m., say)? The high-frequency traders have a huge advantage (but don’t get me started on that)[2].