Taper Tantrum
Categories: Trading
Your toddler asks for candy. You say "no." They let go a piercing screech that seems liable to break glass. From there, the scream wanes a bit until it settles into a simple crying fit. Eventually, it dwindles down to a quiet whimper. One form of a taper tantrum.
Another kind describes an event in Wall Street history. In the economic downturn that followed the 2007-2008 financial crisis, the Federal Reserve had to take dramatic steps to avoid a complete systematic collapse. They were worried about a new Great Depression and, as such, took unprecedented action. Once Fed officials cut interest rates to what amounted to a 0% rate, they added the tactic of quantitative easing. This move added liquidity to the system, providing additional fuel for the economy. Things still got pretty bad over the next few years. But, eventually, the Great Recession started to ease, and the Fed was looking to get a little bit closer to normal.
Fast-forward to 2013. The Fed wants to ween the economy off the quantitative easing. As as result, it announced that it would begin tapering the program...taking it off slowly so that monetary policy could get back to regular operations.
The market reacted badly. The Taper Tantrum. It led to a panic in the treasury market, as evidenced by a sudden spike in Treasury yields. However, like the typical tantrum thrown by a little kid, the initial response eventually faded. The markets whimpered for awhile, but the Fed was able to push forward with its tapering program, returning U.S. central bank policy to something approximating normal.
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Finance: What is Ticker Tape?2 Views
Finance allah shmoop what is ticker tape It's this tick
tick tick you know without the explosion at the end
Okay wavy line time travel dissolve thing Go ahead Back
to nineteen twenty seven Stock information like stock prices used
to be passed along via telegraph machine This thing little
magnets were engaged electronically and the stock prices were printed
on thin paper tape known as ticker tape Yes clever
name However typically only the last numbers would be printed
Like if you had ibm training in one hundred seventy
three dollars Four cents All you would see is that
three Fifty for there on the end Well why would
this happen Well because under this technology the ink and
paper cost off fortune and because there was so much
information to convey well had they spelled out the entire
name of the company rather than the ticker symbol alone
And yes that's how the symbols all came to be
While then that printing would have taken forever just to
send over say an hour's worth of trades And by
the time the prince got done while the trades would
be irrelevant So recycling with all this take laying around
was kind of a thing back then As well And
old ticker tape was used for two things Parades and
well for leper con toilet paper But we don't talk
much about that anyway but more for parade People used
to throw the stuff out of building windows As you
know floats in astronauts and presidents went by Well by
the nineteen sixties the traditional ticker tape parade was no
longer needed There were better and faster ways Teo you
know throw paper and to transmit stock price info Well
today everything's done electronically Thank you The internet No more
dead trees Thank you very much So ticker tape refers
to the stream of stock prices and information that come
through a usually on a mobile device or screen of
some sort today Anyway that's progress worthy of a parade