My brother lent me a hard copy of the book "the Ponzi Factor" by Tan Liu that states the stock market is a Ponzi Scheme, the data in this book is compelling and disturbing. It is a quick read, interested in your view point.
Kevin
Beijing's devaluation of the yuan allowed it to fall by its biggest one-day margin in a decade. The central bank said the 1.9% decline was due to changes aimed at making the way it sets exchange rates more market-oriented. The U.S. dollar also gained against the yen, Indian rupee, South Korean and other Asian currencies.'
http://americasmarkets.usatoday.com/2015/08/11/stocks-tuesday-23/
Optimists take the view that, like a skilled pilot, Fed chairwoman Janet Yellen will be able to bring the size of the balance sheet down smoothly and steadily without hitting too much turbulence.
Pessimists, however, believe the pilot is flying blindly through dense clouds with a faulty radar and constant risk of storms, making the policy normalisation process particularly risky.
"For me the new thing to look out for is what they do to the portfolio," says Robert Michele, chief investment officer at JPMorgan Asset Management. "We know about moving the [interest rate] corridor. What we should be worried about is what they do with the balance sheet."
The Fed's strategy for reducing its bloated balance sheet has evolved over time, but in September policy makers said the Fed will cease or start phasing out reinvestments only after it first begins increasing short-term interest rates. The balance sheet would shrink in a "gradual and predictable manner", but the details were left unclear — as well as the timing, which will depend on how economic and financial conditions evolve.
One market concern is that allowing assets to roll off automatically as they mature could lead to a jagged path of balance-sheet reduction. BlackRock's Investment Institute pointed out in a recent report that a third of the Fed's entire Treasury portfolio, about $785bn, comes due by the end of 2018. Allowing the balance sheet to deflate that quickly could spook markets.'
http://www.ft.com/intl/cms/s/0/520377e8-037e-11e5-b55e-00144feabdc0.html#axzz3bGOeKjV8
Economic Headwind
Not only is the dollar's rise reducing price pressures, making it harder for the Fed to tighten, it's also acting as an "economic headwind reducing the need to tighten," said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.
The FOMC made a nod to the dollar's impact on the economy in its policy statement, noting that export growth has weakened. Yellen was more explicit in her press conference, saying that exports would be a "notable drag" on growth this year and tying that to the strength of the dollar, which she said partly reflected the strength of the U.S. economy.
Yellen said the currency's rise was also "holding down import prices and, at least on a transitory basis at this point, pushing inflation down."
"The Fed sees the stronger dollar as effectively tightening conditions in the U.S.," said Jonathan Wright, a professor at Johns Hopkins University in Baltimore and a former economist at the Fed's Division of Monetary Affairs. "They are worried about what will happen to the dollar and financial markets when the Fed starts tightening with much of the rest of the world at negative interest rates." '
