- Jeffrey E. Gundlach, chief executive of DoubleLine, an investment firm
Disappointing data does not have any influence on the Federal Reserve. This is getting clear from the latest FOMC members' comments, as Atlanta Fed President Lockhart pointed out he will "remain comfortable" with the central bank not increasing rates until the second half of 2015, while San Francisco representative said the hurdle is pretty high to pause tapering, as medium-term outlook suggests stable growth and improving labour conditions.
While some analysts believe the Fed should continue with the QE to assure the long-term prosperity, others believe the Fed may be risking and endless cycle of asset bubbles and busts. Therefore, the central bank should examine the possibility of increased tapering. One reason is the hot market for leveraged loans, as credit spreads over riskless investment narrowed significantly, while covenants designed to protect lenders withered away. Another alarming sign is constantly increasing consumers' willingness to take more credit, as they have borrowed more cash at the end of 2013 than at any time since 2007. Finally, it is the labour market. There are millions of people who have been unemployed for 27 weeks and longer, however, a prolonged period of record-low interest rate will unlikely alleviate it, especially when weighed against the risks of prolonged accommodative monetary policy.
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