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Taper Tantrum Redux? Fed hints at tapering bond buying. Stocks puke

Written By | Aug 19, 2021
taper tantrum, Fed hints

Cartoon by Garrison. Reproduced with permission and by arrangement with GrrrGraphics. (See link below article)

WASHINGTON – Stocks were negative across the boards Wednesday. But then, our ham-fisted Fed waded into a market already poisoned this week by the Afghanistan Debacle. The result: A brand new August edition of the Obama Fed’s original Taper Tantrum, as investors suffered massive coronaries contemplating that the Fed might slow its inflationary bond buying program. The outcome, according to a column in ZeroHedge? Fed hints. Stocks puke. (Which colorful metaphor we stole for our own headline.)

Thursday morning’s action thus far offers no improvement. As of 10:45 ET, the Dow is off roughly 0.50%. That’s followed by the persistently dismal NASDAQ, down again to the tune of a negative 0.30%, with the broader-based S&P 500 off slightly worse at a negative 0.34%. No joy in Mudville — or Wall Street — today. Except maybe for the shorts. They’ve been ruthlessly battered for most of 2021 thus far. With options expiration coming Friday, things could take a weird turn here or there. But right now, negative is the word, particularly for energy and resource issues. The Fed and its Taper Tantrum-inducing remarks are killing any stocks that have anything to do with resources. That includes oil, copper, chemicals and steel. As evidence, our beloved Cleveland-Cliffs (NYSE:CLF) is currently down over 8%. Yikes.

About that Taper Tantrum: Negative Fed hints tank the dollar, oil, & bond yields

That’s the rest of ZH’s headline, which tells what we used to call (in pre-Internet trading days) “the tale of the tape.”

Here’s the relevant ZH verbiage.

“The Fed appeared to hint at tapering its massive bond-buying bonanza and markets went a little bit turbo. Gold and bonds rallied notably while the dollar dropped and stocks had no bloody idea what to do, so they collapsed…

“US equity markets shifted into chaos mode … [and] … whipsawed around significantly before puking lower in the last hour to close down around 1%…”

Tell us what REALLY happened

In other words, US stock markets woke up this morning in a sucky mood. They continued this suckage all day, making only intrepid short sellers happy. And finally let the Fed panic everyone else out of whatever positions they still held. That’s how the last Taper Tantrum unfolded.

BTW, I don’t know what ZH’s Twin Tylers were smoking this afternoon, but my proxy gold-holding ETF, IAU (NYSE:IAU) fizzled while most of my bond and bond proxy holdings took a swan dive this afternoon. I’ll have to ask the Tylers exactly what was rallying in these sectors.

But as far as stocks “collapsing,” yep, that’s exactly what they did. The August doldrums, which I’ve long feared since June, seem finally to be upon us. That negative seasonal sentiment doesn’t help. Those ominous Fed hints didn’t add anything positive either.

We traded out of positions below our usual threshold of pain (-5 to -8%) but held on to the rest of what we still happen to like, knowing full well that August can prove a very nasty month indeed for the average stockholder.

The government’s Delta Variant terror campaign continues

Making things even worse? The fact that neither the lamestream media nor the lamebrains running Homeland Security (DHS) and the flip-flopping Faux Fauci morons heading up the tattered remnants of the CDC can resist trying to either scare or coerce, via fascist tactics, everyone who’s unvaccinated to take the jab. Even, as we predicted, the “pandemic” is quickly morphing into an “endemic” situation, which, like the flu, will be with us forever and ultimately prove more or less manageable.

But that hasn’t stopped Washington’s Brigade of Idiots threaten the general populace with all manner of Covid “passports,” and other fascistic control measures to make damn sure that we all sacrifice our personal freedom of choice to make the nation’s official Karens blissfully happy.

As in this clip from The Daily Bell

“The corporate media has deluged readers and viewers to its newest ‘pandemic of the unvaccinated’ talking points:

“As the highly contagious Delta variant of the coronavirus fuels outbreaks in the United States, the director of the Centers for Disease Control and Prevention warned on Friday that ‘this is becoming a pandemic of the unvaccinated.’

“CNN talking heads and NY Times op-ed writers have not adopted this talking point by accident; through a carefully engineered rhetorical sleight of hand, they have subtly introduced the concept that the actual unvaccinated people – and not the virus itself – are the source of ongoing suffering.”

I.e., “the beatings will continue until order is restored.” We live just outside the nation’s capital city, and it’s feeling more like Moscow-on-the-Potomac every day.

Also Read: Biden ineptitude, Covid nonsense, retail sales continue to hit US stocks

How much uncertainty can shareholders take?

Pour all this bubbling cauldron of stupidity on top of the Afghanistan travesty, the Incredible Disappearing “President,” the vague but scary Taper Tantrum threat, and everything else spooky about a Washington bureaucracy we no longer control. Not to mention freaking out a general public equally poisoned by the government’s Delta Variant terrorism campaign.

And what do you get? Well, the natives are getting restless. And so are those still gutsy enough to try to invest in stocks and bonds. We are watching our nation getting broken apart by a bunch of ignorant, lazy and grossly overpaid fake socialists and doctrinaire Marxists. The French stormed the Bastille for less.

A lousy government = a lousy market

It sure does. And we’ve been getting that this week, big time. Now Mr Market could outsmart us here and decide to rally up to Friday, which is, after all, options expiration day. And that’s always the time of month when screwy things are most likely to happen.

But we don’t like the looks of this market, which perceives, correctly, that our “government” has become pathologically stupid, causing economic and personal decline across the boards. This general perception could slow spending and investing leading to another recessionary environment for businesses, particularly the small ones that form (or formed) the backbone of the US economy.

That’s what many investors have come to fear. This fear, in turn, may be what’s damaging stocks in nearly all sectors this week. As we were once warned after each episode of that campy 1960s Batman TV series, maybe “The WORST is yet to come!”

Concluding market riff: Should I Stay or Should I Go? (The Clash)

Which brings us to this YouTube video featuring an American Classic. One that, at least metaphorically, defines the dilemma of today’s investor.


Headline image: Cartoon by Garrison. Reproduced with permission and by arrangement with GrrrGraphics.


Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17