MutualFundWire.com: BlackRock: Fed Tapering Is "Healthy"

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Thursday, June 27, 2013

BlackRock: Fed Tapering Is "Healthy"

BlackRock[profile] released a mid-year outlook "Exit, Entry and Overshoot" in which it tried to allay fears about Fed tapering later this year, reported Bloomberg's Alexis Leondis. The BlackRock presentation said the job market appears better than it is because of the number of people dropping out of the job market, meaning that the Fed will likely begin the tapering process more slowly than investors think.

An eventual halt in Fed bond buying does not necessarily equal a 1994-style bond market rout,” said BlackRock, which manages $3.94 trillion in assets. “Given a mild outlook for inflation, the Fed will likely err on the side of tapering slowly.

Despite BlackRock's indication that there is hope for a more gradual process, they tout the reduction in asset purchases as "healthy":

A reduction in the Fed’s asset purchases is not Armageddon -- it is actually healthy. Trillions of dollars of stimulus have failed to spur much credit growth and economic activity. Money market multipliers across the world have essentially collapsed.