Why We Think "Tapering" Is Tightening

While Fed watchers continue to debate the timing of the first post-2008 Federal Funds rate hike (first or second quarter of 2015?), we believe the first move toward tighter policy occurred in January of this year, when the Fed first reduced its monthly bond purchases down to $75 billion (a $10 billion reduction). Our opinion isn’t based on any intricate knowledge of Fed liquidity flows, but simply on the subsequent action of two key stock market segments.

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