Goldman Sachs expects Federal Reserve to taper QE in September 2013

Riken Mehta

Brokerage house Goldman Sachs expects the Federal Reserve to taper its quantitative easing programme in its FOMC meeting scheduled in September. On the back of stronger June payrolls growth, upward revisions to prior months job data and a larger-than-expected increase in earnings, the broking firm revised the FOMC's tapering call from December 2013 to September 2013.

"We expect that purchases may be reduced from the current rate of USD 85 billion per month to USD 65 billion per month, with most or all of the adjustment occurring through reduced Treasury purchases. We are not changing our call for the date of the first fed funds rate increase, which remains in Q1 2016, at which point we forecast an unemployment rate of 6.0%," said Goldman Sachs Research note to clients.

It added that the unemployment rate remained unchanged, but the employment-to-population ratio and labor force participation rate increased.

Analysis: How Sensex & Dow Jones react to US presidential polls

Riken Mehta
Moneycontrol.com

Judging from the initial reaction of benchmark indices, President Barack Obama’s re-election appears to have struck the right chord among investors in India. But historical trends show that the Indian stock market has been largely indifferent to the outcome of Presidential polls in the US, except in 1996.

Interestingly, four out of five times in the past, the Sensex and the Dow Jones have moved in opposite directions after the Presidential elections threw up a winner. The Sensex surged 3.37% when Bill Clinton emerged victorious in 1992, but Dow Jones lost 0.90%. The US index gained 1.6% in 1996, when Clinton was re-elected as the the President. However, Sensex lost marginally after Clinton's re-election. Similarly in 2008, when Obama became the 44th US President, investors in India appeared more pleased, going by the upmove in the Sensex.

Refer to the table below to check out how Indian and the US markets reacted after US presidential polls.

Year	US Presidential	Political	Electoral	US Presidential	Political	Electoral	Dow Jones	Sensex
	Candidate Winner	Party	Votes Won	Candidate Loser	Party	Votes Won
04-Nov-08	Barack Obama (44th Pres)	Democratic	365	John McCain	Republican	173	-5.04%	2.84%
02-Nov-04	George W. Bush (43rd)	Republican	286	John Kerry	Democratic	251	1.01%	0.87%
07-Nov-00	George W. Bush (43rd)	Republican	271	Al Gore	Democratic	266	-0.41%	0.59%
05-Nov-96	Bill Clinton (42nd)	Democratic	379	Bob Dole	Republican	159	1.58%	-0.96%
03-Nov-92	Bill Clinton (42nd)	Democratic	370	George H.W. Bush	Republican	168	-0.90%	3.37%