Ironside's Knapp Sees 10%-12% Market Pullback in Fall

The transcript discusses the potential market reactions to tapering by the Federal Reserve, focusing on three main channels: psychological effects, real rates, and volatility. The volatility channel is highlighted as the most significant, with the Fed's actions on mortgage-backed securities influencing market volatility. Predictions include a market pullback of 10-12% due to policy changes, with a potential recovery by year-end.

What is one of the channels through which tapering affects asset classes?

• Psychological signaling

• Currency devaluation

• Increased government spending

• Trade tariffs

How does the Fed suppress interest rate volatility?

• By reducing government debt

• Through foreign exchange interventions

• Through purchases of agency mortgage-backed securities

• By increasing interest rates

What is the biggest source of volatility in the markets according to the speaker?

• Currency exchange rates

• Stock market fluctuations

• Commodity price changes

• Mortgage prepayment risk

What does the speaker predict will happen to the market in the fall?

• A 20% increase

• No significant change

• A complete market crash

• A 10 to 12% pullback

What condition is necessary for a market recovery by year-end?

• A decrease in interest rates

• An announcement in September and start in October

• A new trade agreement

• A rise in inflation