This column originally appeared on Real Money Pro at 7:49 a.m. EDT on Sept. 16.NEW YORK ( Real Money) -- To use a Poker/Texas Hold 'Em term, the bulls got " runner-runner" (no imminent attack on Syria-no Lawrence Summers as Fed Chair) over the weekend. Never mind that the probabilities of a military engagement and a Summers nomination were decreasing on a daily basis last week, as opposition to both intensified. As a result of the news, futures are at an all-time high this morning. The consensus view is that bond yields and the price of gold will head lower -- I have an out-of-consensus view that bond yields will drop -- and stocks will head higher. Indeed, every message and analysis I have received from the sell side is unanimous in view. Every one. But there are negatives, mostly of a longer-term kind. But who really invests for the long term anymore? Most importantly, decisions in Washington, D.C., have become too damn political, which is not good for the long term. Moreover, what is the real significance of a more accommodative Fed (likely) under the leadership of Janet Yellen when there is ample evidence that quantitative easing is losing its effectiveness? Finally (and arguably), QE is creating distortions in both the bond and equity markets. Which gets us to the FOMC decision this week. The odds are high that a light tapering is forthcoming and that this move will be accompanied by language that will attempt to convince financial markets that scaling back asset purchases is not a policy change but rather just a technical adjustment. It is clear that a growing amount of research from within and outside of the Fed have questioned the efficacy of QE. As well, Fed voting members want to make a graceful exit from its asset purchase program. As the chief architect of QE, Chairman Bernanke would prefer to start to wind down ahead of his January 2014 departure. Though Fed officials will never admit it, they must be thinking that there are real/growing costs to its policy of transparency. Of course, for the capital markets, the tapering will be quickly followed by the budget deadline and all the divisiveness from our leaders (on both sides of the political pew) surrounding it.
The above tapering considerations are largely noneconomic. In terms of an economic rationale for sustaining the asset purchase program, most agree neither the U.S. nor areas outside of the U.S. are in an emergency condition that requires more assistance from the Fed. We are four-plus years beyond the crisis, and extreme policy conditions seem like overkill, at worst -- at best, they are less compelling that at any point since 2009. But benchmark economic expectations are not being met, and, once again, Fed economic projections seem too optimistic. The general expectation of a second-half (2013) economic reacceleration is now problematic in the face of weak incomes (wage and salary growth were lower in July, and August doesn't look much better), a stall in housing and disappointing jobs growth (160,000 new jobs a month compared to the Fed's threshold of 200,00 a month). In support of my slowing U.S. growth thesis, a number of Wall Street firms have lowered their third-quarter 2013 real GDP forecasts. (On Friday, JPMorgan cut its third-quarter growth projection from +2.5% to +2.0%.) Mr. Market will undoubtedly face the music, but the timing remains uncertain. (Doesn't it always?) Two weeks ago, I outlined my expected move toward a test of new highs. Based on the gap higher in futures, we will eclipse the old high on the opening. The bottom line, for now, is that market participants are clearly emphasizing the positives and deemphasizing the negatives (some of which I have discussed in today's opening missive), as, once again, the crowd has outsmarted the remnants (who increasingly look like they are on" tilt").