Is it the calm before the taper? Investors and financial analysts appear confident that the Federal Reserve’s announcement today won’t contain any bombshells. But a change in stimulus policy is likely. Stock futures rose this morning and the Dow and S&P 500 closed modestly higher yesterday despite a widely expected first step by the Fed to reduce the size of its purchases of government bonds and mortgage-backed securities.
In a statement set for this afternoon, the Fed is likely to start cutting the $45 billion a month in Treasury bond purchases. That could leave untouched the $40 billion set aside for mortgage-backed securities. “I think you’re going to finally see some sort of drawdown — how much, it’s difficult to say,” Joe Deaux, economics analyst for TheStreet.com tells ABC News Radio. The moves may be cautious and the tapering of these purchases may take months before the policy ends. Deaux says recent rounds of quantitative easing have boosted stock prices. “Traders have felt that so long as the Fed says that it’s going to act then there’s every reason to buy into stocks.”
Starbucks is asking its customers to leave their guns at home. But it is stopping short of an outright ban. The coffee shop chain is in a difficult position, and there has been a negative response on its Facebook page to its request. Most states allow people to openly carry licensed guns in some way and many companies do not have rules banning firearms in their stores. But Starbucks has become a target for gun control supporters. In turn, gun rights advocates have been galvanized by the company’s decision to defer to local laws. In an interview, CEO Howard Schultz said the decision to ask customers to stop bringing guns into stores came as a result of the growing frequency of “Starbucks Appreciation Days,” in which gun-rights advocates turned up at Starbucks cafes with firearms.
Spending cuts at the IRS may be having an impact on how much money the government brings in. The inspector general of the IRS says budget reductions are undercutting the agency’s ability to go after tax cheats. A report by J. Russell George says that tax collections from enforcement actions dropped by 9 percent in the 2012 budget year, to a little more than $50 billion. It was the second year in a row that enforcement collections fell. In 2011, enforcement revenue dropped by more than $2 billion. Last year, it dropped by $5 billion more. A new Treasury report also says the IRS is opening more delinquent taxpayer accounts than it is closing. The IRS has shed about 8,000 jobs since 2010.
Greek civil servants walked off their jobs today at the start of a two-day nationwide strike protesting planned job cuts required as part of the country’s international bailout. The strike affected all public services across Greece. The walkouts are the first widespread strike action after the summer and aim to put pressure on the coalition government to repeal unpopular austerity measures. Officials have vowed not to back down.
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow