Markets have shown little enthusiasm to break out of the narrow trading ranges established over recent months. The US Federal Reserve said it would begin tapering its monthly asset purchases to $105bn from $120bn, with another $15bn reduction this month. Note, it’s only reducing the amount of assets bought with resources conjured out of thin air. It is not ceasing; even if the present rate of reduction is maintained, it will be June 2022 before we get to that point. Perhaps then, The Fed, and other central banks, might actually start selling some of these assets in order to recapture all the funny money they’ve created. Then again, our natural cynicism tells us that with governments up to their metaphorical necks in debt, endlessly spending money they haven’t got and with monetary authorities compliant in ‘fixing’ borrowing costs, Plan B of Quantitative Easing will be kicked into the long grass.
We see little reason to change tack. We want to own the shares of excellent businesses indefinitely. If they can be sourced at prices we are prepared to pay, we’ll proceed and if not, we’ll simply wait until they are.
