The Tapering

Queen Anne's Lace

Queen Anne’s Lace

The Tapering, it sounds like the title of some new Stephen King horror novel, but it is not as scary as it sounds. Tapering is a tried and true training technique employed by athletes. Athletes will taper off their training exertions in the days preceding a big event, like an important race. Easing up a bit, allows athletes to rest up a bit and husband their strength and stamina for the coming main event. Some athletes have reported undesirable side effects from tapering. Tapering sometimes leaves the athlete feeling down or depressed. The athlete’s friends and family members might also notice increased irritability or grumpiness. These are classic withdrawal symptoms, in this case a withdrawal from exercise.

The Tapering is the name that Wall Street has given to the Federal Reserve’s anticipated curtailment of Quantitative Easing. For many months now, Ben Bernanke and the Fed have been pumping boatloads of money into the US banking system and markets, most recently to the tune of $85B per month. Helicopter Ben and his gang of Federales has been the only arm of government that has been making any effort of late to stimulate the economy and get this country out of the deepest recession since the Great Depression. Republicans are doing worse than nothing and have deadlocked the rest of government. Only the Fed has been free to act, but its only tool is to throw more money at the problem. I guess that if you have an infinite supply of money, then just throwing it eventually becomes an effective weapon, because last week Ben let it be known in the most gentle terms that the party might someday come to an end.

This little hint that someday, in the indeterminate future, Quantitative Easing would be gradually eased out has spawn the term The Tapering and caused the stock markets fits. On the one hand this is a good thing; experts at the Fed are glimpsing the light at the end of this long dark recession. Economic indicators are looking more positive. More people are finding jobs than losing them, albeit not at a quick enough pace. Even the housing market is beginning to show the first few tremors of life. On the other hand, the stock market’s free money fed frenzy may have to come to terms with reality. The economy is slowly, but steadily improving since the dark days of deep recession, but has it really improved as much as the record levels of the DOW and S&P seem to indicate? Bernanke and company will now have to demonstrate a finesse to rival their already demonstrated courage and successfully wean those cranky Wall Street Olympians off the Feds teat. It would be better for all to avoid those pesky tapering side effects, like depression.

A Pony for Jane, with Beer!

Clydesdale at Schnucks

Clydesdale at Schnucks

I was surprised, when I stopped by Schnucks yesterday, the pictured Clydesdale was holding court in front of the grocery store. This signature animal and his brethren are key aspects of one of the local brewer’s marketing campaign. When Anheuser-Busch’s Clydesdales come to a town it is always a big deal. It is a big deal here in Saint Louis too. It just occurs way more frequently here. This one is not quite big enough yet for beer wagon duty, but worked well in a petting environment. And yes dear Jane, there was free beer being poured in the store.

That’s not just any pony, that’s a Clydesdale, the biggest animal in the world!

The preceding statement was heard uttered almost thirty years ago. Anne and Bill, et al. had come to visit Saint Louis. I took them on the brewery tour. As a good host, I think that I offered to pay for their tickets. On our tour was a threadbare woman, possibly homeless. She quietly kept to the back of the group and only uttered this one statement, when the tour visited the brewery’s stables. In the hospitality room, she waited until all of the tourists were served, before she asked for her one beer. Back then the hospitality room was in the middle of the tour. I guess to give people time to sober up again. This woman elected not to accompany the second half of the tour and ducked out.

When I die and find myself in front of the pearly gates, I expect Saint Peter to tell me, I cannot enter heaven until my other half arrives. I don’t say my better half, because we are all equal in the eyes of the Lord. Phbbtht!

“Stop by and see me when you get in Dahling.” This text was on my phone, when I checked it this morning. It turns out that it wasn’t for me, but for my wife. Kris the school secretary had sent it to Anne. Last month, I offered to upgrade the iOS on her 3GS phone. The process required an iTunes login and since Anne didn’t have one, I used mine. Now her texts are mine and mine are hers. Isn’t that how marriage is supposed to work? What is most annoying is that whenever I send a text to her or she sends a text to me another text is sent to ‘this phone’. We already share a checking account, email address and a marriage bed, but this texting thing is a bridge too far. We’ll have to go to AT&T.

Speaking of our joint checking account, we are still working our way through the aftermath of the Schnucks credit/debit card hack. On Wednesday, Anne updated her bank card PIN. On Thursday, with the hot breath of a Clydesdale breathing down my neck in the checkout lane, my PIN was invalid. Today, with Anne’s PIN it worked just fine. Confronted with these facts, she said, “You’ve had that PIN way too long, it was time to change it.”

Western Indian Paintbrush

Western Indian Paintbrush

Western Indian Paintbrush

They announced bonuses this week and mine was a good one. Of course, I have effectively already flushed the money down the toilet. I’ll use it to pay off last year’s sewer work. Even though the media seems to be hating on us and trying to make our dream look like a nightmare, none of that will be booked until next year. Live for today and let tomorrow take care of itself, that’s my motto.

The Dow, reached 14,000 today, for the first time in five years. This is a sign of recovering markets, if not the full economy. Last quarter’s GDP was down and last months unemployment was up, so it’s not all rosy news. Although, private sector hiring is up, government employment is down and as I mentioned, the markets are way up, critics still see President Obama as a socialist. He must be the worst example of a socialist ever. 😉

My house is underwater. Not the whole thing, just the basement. Our basement seems to have found a new way to get wet. We got a lot of rain this week. Our new sewer and gutters seems to have been circumvented by last year’s drought. Anne thinks that the dry weather has caused the soil to pull away from the foundation. I think that one of the supposedly uncloggable downspouts has clogged. The result is that now ground water is weeping up through all the cracks in the basement’s floor. At least it is now relatively clean water and no longer poo water. So, I don’t have to bleach the floor afterwards.

After Monday’s balmy 75 °F high, we’re back in the ice box again. This morning’s low was in single digits. It is enough to make one want to run away. Consequently, we started planning our Spring Break and now we are looking at New Mexico as our vacation destination. I was there, last year on business and this business trip to vacation trip model that we first pioneered several years ago in Florida looks like a repeat. When I was there on business last year, I mainly hung out in southwest New Mexico. This time we are looking at the north end of the state, Santa Fe and Taos. We are soliciting ideas on places to stay, places to eat and places to see. Please let us know your recommendations.

Putting on the Bear Suit

Think back to that dark time, only two years ago, during the winter of 2008. President Obama had just been inaugurated and the accompanying pomp and circumstance offered only a brief respite from the drumbeat of bad economic news that had become our fare. The housing market had crashed and record foreclosures ensued. Many people had lost their jobs already and many more would lose their jobs in the intervening years, this cycle begat even more home losses. All of the markets were down; the Dow had dipped below 8,000. This was the Great Recession at its nadir or was it? If the Great Recession were to follow the prescription laid out by the Great Depression then that dip was not the end of our economy’s downward ride, but only the pause before the storm.

In the last two years the housing market has not recovered. Likewise, neither has the job market show much new life and the Democrats took a “shellacking” in last year’s midterm elections. The one bright star in the financial picture has been the stock markets. The Dow has led the charge and has risen by 50%, to 12,000. If blame is to be applied to a president for events on his watch, then so should credit. A 50% rise in stock prices is not too bad for a socialist. 😉

If the Great Recession does aspire to become the Great Depression II then most economists, just don’t see it happening, but then they didn’t see it in the first place either. It is much easier to study a threat that has shown its danger than it is to observe the unknown one. One is sure to be more careful about a dog that has already bit them than a dog that one not seen. I think that the record of the last two years speaks to this. A near-term catastrophe has been averted, even if much pain has not. The economy is moving forward, if even with a limp.

So where do we go from here? Improvement in the job market is expected, even if it doesn’t come soon. The housing market will take longer. Fortunately, for me, I have a job and a house and I’m not expecting to lose either of them soon. Two winters ago, I wished that I had put on the bear suit though. It would have protected my portfolio. In the intervening years I have benefited from going bare, not wearing the suit and remaining in the equity markets.

There is an old adage about the stock market, “Sell in May and go away.” It speaks to the traditional summer doldrums that plague the markets. The problem with this adage is that it requires putting the bear suit on in the middle of the summer. This sounds too hot and scratchy a proposition for me. I could move up to Canada, where it is cooler, but what then if I meet a real bear. Any of my lukewarm bearish “feelings” would falter quickly when faced with a real bear’s charge. I think instead, I’ll just rebalance my profits and then visit the zoo.

This post’s tasty eye candy is of course courtesy of Chris. Chris also gave me the tittle for this post. Checkout his photography page on RegenAxe.