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Beige Book: Modest Growth, And Other Excuses For QE2

Tyler Durden's picture




 

Beige Book Highlights:

  • Manufacturing continued to expand in most districts
  • Consumer spending steady to up slightly, purchases mostly limited to necessities
  • Housing markets remained weak and house prices seen stabilising, commercial real estate subdued and construction weak
  • Home inventories elevated or rising in most districts
  • Input costs, notably for agricultural commodities and metals rose further but not passed on to consumers
  • Prices of final goods and services mostly stable and says wage pressures minimal
  • 'Lending activity was stable at low levels' in most areas

Summary:

Manufacturing activity continued to expand, with production and new orders rising across most Districts. Demand for nonfinancial services was reported to be stable to modestly increasing overall. Consumer spending was steady to up slightly, but consumers remained price-sensitive, and purchases were mostly limited to necessities and nondiscretionary items. New vehicle sales held steady or rose during the reporting period; sales of used automobiles were strong as well. Activity in the travel and tourism sector picked up.

Housing markets remained weak with most Districts reporting sales below year-ago levels. Reports on prices suggested stability, however. Conditions in the commercial real estate sector were subdued, and construction was expected to remain weak. Lending activity was stable in most Districts. Agricultural conditions were generally favorable, and above-average yields were expected in most reporting Districts. Activity in the energy sector continued to expand.

On input cost inflation, and wage deflation:

Input costs, most notably for agricultural commodities and industrial metals, rose further. Shipping rates increased, and retailers in some Districts noted rising wholesale prices. However, prices of final goods and services were mostly stable as higher input costs were not passed on to consumers. Wage pressures were minimal.

Full report link

 

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Wed, 10/20/2010 - 14:11 | 664734 vote_libertaria...
vote_libertarian_party's picture

...and this says we need to add $1T more in funny money from the Fed???

 

They know the tsunami is about to hit, they just don't want to say it openly.

Wed, 10/20/2010 - 14:14 | 664747 Cdad
Cdad's picture

No...it says quite the opposite.  Printing money right here and now would be a clear bailout of banks...again.  And I think the Fed realizes the gravity of the political situation in America right now.  More bailouts NOT POSSIBLE.

Quants responded very quickly to the book...sell programps coming in...but not much movement yet.  How Wells is where it is today is literally some sort of magic trick.

Wed, 10/20/2010 - 14:23 | 664766 SDRII
SDRII's picture

WFC is the world's biggest POS - Remeber when Buffet's whore raised their dividend into the short squeeze..

Wed, 10/20/2010 - 14:15 | 664750 hedgeless_horseman
hedgeless_horseman's picture

Tsunami?  In America?  It seems to me that a long, slow, painful, and wasteful demise along the lines of cancer is much more likely.

Wed, 10/20/2010 - 14:22 | 664768 cossack55
cossack55's picture

Sure. Google La Palma and find out why Florida RE is so cheap.

Wed, 10/20/2010 - 14:12 | 664742 putbuyer
Wed, 10/20/2010 - 14:19 | 664763 IdiotInvestor2
IdiotInvestor2's picture

I amnot sure why QE2 is needed ? Earnings are OK - not terribly bad. Commodity inflation is raging. So why the f*ck we need more free money ? Unemployment is the real problem, but how does QE2 solve it ? Mortgage rates are already lo, so more QE isnot going to help housing, when the employment is so low. It probably helps Govt (Fed and state) to raise more debt if QE2 reduces long term interest rates. But stock market is near 52 week high, commodities are at all time high, so why do we need even higher asset prices ?

Either the Fed knows something terrible that we don't - like some banks or pension funds that will soon be in trouble - or they are stupid beyond belief.

Wed, 10/20/2010 - 14:23 | 664769 SDRII
SDRII's picture

Blackrock's Fink said this am that the Pension funds will have to raise their equity allocation in 2011 to "catch up" with demos as rates remain lower for longer

Wed, 10/20/2010 - 14:23 | 664770 Dapper Dan
Dapper Dan's picture

Alex,  I'll take banks or pension funds for $200

Wed, 10/20/2010 - 14:36 | 664811 Conrad Murray
Conrad Murray's picture

Winner winner.  More backdoor bailouts "for the good of the country" at the expense of our future.

 

Hump Day playlist, enjoy the music!
http://www.youtube.com/view_play_list?p=D78860E6821CDD13

Wed, 10/20/2010 - 14:23 | 664773 Cognitive Dissonance
Cognitive Dissonance's picture

I am not sure why QE2 is needed?

So you believe what the bankers and their government stooges tell you?

Because QE 2 - 10 has nothing to do with "the economy" and everything to do with covering up the massive fraud that's been going on since the 70's. 

Wed, 10/20/2010 - 14:29 | 664788 traderjoe
traderjoe's picture

Original: "covering up the massive fraud that's been going on since the 70's."

Corrected: "covering up the massive fraud that's been going on since 1913."

There, fixed it for you. :)


Wed, 10/20/2010 - 14:34 | 664800 Cognitive Dissonance
Cognitive Dissonance's picture

I agree.

I was thinking more along the lines of when we convinced the rest of the world to join in the fun when we unilaterally removed the world from the Gold standard.

Wed, 10/20/2010 - 15:07 | 664907 Dagny Taggart
Dagny Taggart's picture

Ayn Rand called it as of 1890, the Sherman Antitrust Act.

Wed, 10/20/2010 - 15:31 | 665005 traderjoe
traderjoe's picture

True 'dat. 

On an aside, I've been spending time reading about Maritime Law, the difference between TRADER JOE (the corporation) and Trader Joe (the individual), the IRS as a non-authorized Puerto Rico collections agency, UCC laws, our individual credit accounts at the Treasury and how we allow banks to borrow from them (and charge us interest for it), birth certificates as 'securities', renting land from taxing districts as opposed to owning it as a sovereign, etc., etc.

The "matrix" really is deep, pervasive, and we really don't live, by any stretch of the imagination, in the free and individualistic society we imagine...

Wed, 10/20/2010 - 16:44 | 665234 Cognitive Dissonance
Cognitive Dissonance's picture

I've looked into this myself on several occasions. And I've often thought about writing an article about the concept. But if I did so, I would be using third party info because I really don't understand Maritime or Civil law. Thus I would be relying upon an other's interpretation.

But it all does seem to make sense. After all, The Matrix must appear to be solid and inescapable, right? One can't "own" a soul unless the soul consents to being owned. It doesn't matter if it's an informed and aware consent, just that it's a willing consent.

Have you noticed that the modern day Matrix has all the makings of a good old fashioned Bible Story?

Wed, 10/20/2010 - 17:37 | 665362 traderjoe
traderjoe's picture

What I find interesting is how many of the famous sci-fi movies, like Blade Runner, Matrix, 1984, etc., etc. describe the slow but eventually complete loss of personal freedom. The warnings have been there for decades, but in many ways the movies are viewed as entertainment but not necessarily the warnings they are... But I guess if one turns up the water only so fast...you don't notice it boiling around you...

Wed, 10/20/2010 - 22:41 | 665919 StychoKiller
StychoKiller's picture

Careful there!  The IRS has ruled that these goofy notions of using UCC and supposed "Treasury Designated Accounts" to swim around paying taxes are bogus.

Wed, 10/20/2010 - 14:57 | 664881 the rookie cynic
the rookie cynic's picture

"I am not sure why QE2 is needed?"

First of all, I'm not sure either.

Maybe it's more geopolitical as opposed to a purely domestic concern, like an attempt to break the dollar/yuan peg at all costs - inflation, riots, and interest rates be damned.

Also, to address the second part of your post, the banks and pension funds are in much deeper trouble than most people realize. Jamie Dimon's CDS/MBS/Derivative balloon is/was bigger than global GD-f-ingP. How much is Benny going to print to unwind that SOB?

Wed, 10/20/2010 - 14:24 | 664774 cossack55
cossack55's picture

Should it not more appropriately be called the "Brown Book"?

Wed, 10/20/2010 - 14:34 | 664801 SteveNYC
SteveNYC's picture

One reason to end the lying Fed:

"Input costs, notably for agricultural commodities and metals rose further but not passed on to consumers"

Wed, 10/20/2010 - 14:34 | 664803 HarryWanger
HarryWanger's picture

Consumer spending steady to up slightly, purchases mostly limited to necessities

How does that explain Apple selling $20 billion worth of iGadgets last Q? I guess they're right, iGadgets have become necessities.

Wed, 10/20/2010 - 14:57 | 664882 10044
10044's picture

I wonder if they'll come up with iShit soon

Wed, 10/20/2010 - 14:36 | 664807 Unlawful Justice
Unlawful Justice's picture

This is conditioning America so when they start to tell the truth we won't believe them.

Wed, 10/20/2010 - 14:50 | 664857 themacronavigator
themacronavigator's picture

braindead!

Wed, 10/20/2010 - 15:54 | 665078 rosiescenario
rosiescenario's picture

...while inept at all things that would be productive, our leaders are expert at disinformation, having honed those skills to near perfection...and I used to laugh at Pravda's articles...they were junior league compared to what I see daily in our press.

Wed, 10/20/2010 - 14:44 | 664837 Quinvarius
Quinvarius's picture

>>>Additionally, corn producers in the Chicago District were holding on to recently harvested corn in hope of even higher prices.<<<

Anyone else catch how they are explaining away corn prices?  It is those dam speculators!  LOL.

Wed, 10/20/2010 - 15:08 | 664919 HarryWanger
HarryWanger's picture

Growth is growth I suppose. Just muddling along as expected. Nothing really bad. Nothing really good. Just muddling.

Wed, 10/20/2010 - 15:18 | 664952 Cognitive Dissonance
Cognitive Dissonance's picture

It's a muder alright.

Wed, 10/20/2010 - 15:33 | 665013 espirit
espirit's picture

But the economy is growing, if only slightly and there is evidence of inflation.

We don't need no stinkin' QE2, let the chips fall where they may.

Ah, a flashback moment.

Wed, 10/20/2010 - 15:43 | 665054 HarryWanger
HarryWanger's picture

Why do I get the impression if the Beige Book said, "economy is growing at a nice clip and employment is picking up, there will be no QE2" most here would cry "bullshit - the economy is not growing and employment is not picking up".

Either way, most here would scream foul, QE2 or not? What would make you happy?

Wed, 10/20/2010 - 16:29 | 665188 duncecap rack
duncecap rack's picture

the truth, the whole truth, and nothing but the truth.

Wed, 10/20/2010 - 15:48 | 665064 hammel123
hammel123's picture

yes, QE2 is about putting a floor under interest rates, which are about to start rising pretty quickly, because the U.S is taking it's time to "embrace austerity. From the periphery to the core first Latvia, then Ireland -> England/France -> U.S cut those "entitlements" and deficits or we'll do it for you

Wed, 10/20/2010 - 15:50 | 665068 rosiescenario
rosiescenario's picture

"...commercial real estate subdued..."

...commercial real estate is taking a dirt nap. My company has 2 properties that were scheduled to be built into self storage centers. The regional bank lending on these went under 2 weeks ago, I have no idea who now holds the notes, the current appraised value is 50% of what was borrowed, the loans come up for renewal early next year....our experience is shared by thousands of others. The commercial real estate implosion should hit during the first half of 2011...given the weakened state of our banks, this will put many of them out of business...no one is going to be buying these properties for at least another decade. The other impact will be the dramatically reduced property tax base forcing local governments to reduce police, fire, school, and other such services and adding more to the unemployment pool.

 

...and meanwhile the Fed continues to give Wall Street a golden shower of POMO money used to prop up already over valued stocks.

 

Frankly I am surprised at the amazing amount of restraint the American public has shown.But this sleeping giant is well armed and once aroused there is going to be hell to pay by all of our criminally inept leaders.

Wed, 10/20/2010 - 16:08 | 665122 There is No Spoon
There is No Spoon's picture

Because the economy isn't growing at a nice clip, employment isn't picking up, and qe2 isn't going to help. If the Beige Book said, "economy is growing at a nice clip and employment is picking up, there will be no QE2," and it was true, that would be great news, and a different reality. The reality we face is the Fed painting itself and the whole world into a corner.

Wed, 10/20/2010 - 16:10 | 665134 Sokhmate
Sokhmate's picture

Any updates on the Red Book?

Wed, 10/20/2010 - 16:18 | 665154 Bruce Krasting
Bruce Krasting's picture

QE is an emergency measure. I am still not convinced it was appropriate during the 08-09 "emergency". But there is no way in hell that this report justifies the use of the emergency measures. What the fuck is going on here? How can this report be the backdrop from the 11/3 meeting. Bernanke is totally blind. He is pregnant on QE and can't back off at this point. Treasury will not say a word and the White House is going to just let this happen because it is the only chance they have got. There is no one in congress that can even slow this down.

The Fed is running the show, and they will run us into the ground.

 

 

Wed, 10/20/2010 - 16:44 | 665238 TexDenim
TexDenim's picture

How good would the BB have to be before they called QE2 off? This was surprisingly upbeat compared to last month.

Wed, 10/20/2010 - 16:52 | 665257 Bankster T Cubed
Bankster T Cubed's picture

oh man - a report from the fed -- what a hoot -- as if i'm gonna waste more of my life reading that fiction

to hell with all of it.   nothing matters anymore.  our whole system is a fraud.

Sat, 11/13/2010 - 08:21 | 724495 mark456
mark456's picture

Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic.
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