The Tapering

After 6 months of anticipatory jostling in 2013, the Tapering launched with a whisper. The second installment of fine tuning is slated for the coming meeting and Bernanke's exit. Oddly, the oppressive hand of CB market meddling that pinned down volatility as an objective - The Stability Mandate - has so far remained strong as Tapering has unfolded. We don't think it can last.

Capital markets have kicked off 2014 with little action, outside of a few currency gyrations. We believe, into and out of the 2nd LSAP adjustment, price discovery unchained from Fed action will become more hectic. The process of supply placement will experience turbulence. Rick Santelli will be grading more C's and D's than A's.

We've always been skeptical of the Stability objective of Central Banks. Markets, like sharks, need to move to survive. "Down" is a natural part of the process not something that can be eliminated by mandate. In the meantime, the slumber continues.

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