This is an interview from Barrons of Leon Cooperman and Steve Einhorn of Omega which manages USD 8.5 bn mainly in equities, so when these two share their viewpoints, one had better pay attention. There are a few thoughts I found interesting but the key comment that caught my eye was:
Einhorn: First of all, it is not an issue that investors will have to contend with for at least the next 12 to 18 months, which captures a good deal of most investors’ time horizons. Second, the Fed does not have to actually sell assets off its balance sheet. All it has to do to unwind its balance sheet is to let those securities mature. And as they mature over time, the Fed’s balance sheet declines. This notion of an abrupt end to QE is wrong. What they will do is taper it off. They have been buying $85 billion a month of securities. So, for example, when they begin to taper that off, whenever it happens, they’ll go to $75 billion a month, then $65 billion, or whatever the number happens to be. Tapering off should not be a jolt to economic activity or the markets. All they have got to do is let these assets mature and roll off.