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FOMC Minutes
Information received since the Federal Open Market Committee met in
June suggests that economic activity is leveling out. Conditions in
financial markets have improved further in recent weeks. Household
spending has continued to show signs of stabilizing but remains
constrained by ongoing job losses, sluggish income growth, lower
housing wealth, and tight credit. Businesses are still cutting back on
fixed investment and staffing but are making progress in bringing
inventory stocks into better alignment with sales. Although economic
activity is likely to remain weak for a time, the Committee continues
to anticipate that policy actions to stabilize financial markets and
institutions, fiscal and monetary stimulus, and market forces will
contribute to a gradual resumption of sustainable economic growth in a
context of price stability.
The prices of energy and other commodities have risen of late.
However, substantial resource slack is likely to dampen cost pressures,
and the Committee expects that inflation will remain subdued for some
time.
In these circumstances, the Federal Reserve will employ all
available tools to promote economic recovery and to preserve price
stability. The Committee will maintain the target range for the federal
funds rate at 0 to 1/4 percent and continues to anticipate that
economic conditions are likely to warrant exceptionally low levels of
the federal funds rate for an extended period. As previously announced,
to provide support to mortgage lending and housing markets and to
improve overall conditions in private credit markets, the Federal
Reserve will purchase a total of up to $1.25 trillion of agency
mortgage-backed securities and up to $200 billion of agency debt by the
end of the year. In addition, the Federal Reserve is in the process of
buying $300 billion of Treasury securities. To promote a smooth
transition in markets as these purchases of Treasury securities are
completed, the Committee has decided to gradually slow the pace of
these transactions and anticipates that the full amount will be
purchased by the end of October. The Committee will continue to
evaluate the timing and overall amounts of its purchases of securities
in light of the evolving economic outlook and conditions in financial
markets. The Federal Reserve is monitoring the size and composition of
its balance sheet and will make adjustments to its credit and liquidity
programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles
L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel
K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
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I asked this last FOMC minutes... what the hell does "for a time" mean.... no shit, they have already been weak for a time...
"Although economic activity is likely to remain weak for a time"
"Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. "
as if they would say, "...we crunched the numbers, and it looks like we fucked up..."
That likely means less time than "a considerable period of time".
Not that it helps you much.
LOL, no I hear you...and it probably means more time than immediate as well...
Redux: keep buying stocks and oil until October. Current level of low-interest rate loans (thanks, taxpayer!) to financial center banks being maintained equals maintenance of current pricing trend of liquidity-inflated assets.
If they're really going to shut off the spigot at the end of October, I'd assume the Boyz will begin quietly liquidating before then, then crater the market before anyone else expects it and call it "discounting"...
That said, I don't see how they're going to shut the spigot off when it's the only thing preventing a Trashury auction fail. I suspect the "end" of QE just means they have some other backdoor debt monetization mechanism just about ready to launch.
As always if anyone has a better handle on the game plan please speak up!
"Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. "
His message was being spread and gaining even more support...therefore he needed
to be censored.
Until we have guys like Black back as regulators nothing will
change. We just
good articles;
target="_blank">my newest bookmarked finance website
they'll just buy them on the open market instead of at auctions. "primary dealers, do your civic duty and buy taht shit. we have you covered. promise."
What is weak.........and what is time
what is "is"?
Hey you beat me to it. Joe Sixpack always finishes last in the USA.
...what is "is"?
"all available tools" is a typo. They have one tool and it is a printer. They are just going to focus on monetizing other kinds of garbage debt.
When are they going to mail everyone a CD-ROM so we can just print our own money?
I wish things were as cool as sardonicus on UB 40, they seriously are not. How anybody can get happy about this FOMC statement, repeatedly negative, is truly beyond the beyond.
Mind flush please!!
The key line, in my mind, is the end of Oct statement. Keep in mind that in political circles it is well understood that Obama will decide Ben's fate in Oct... This would at least indicate that the FOMC is wanting to make sure that things rise until the Ben's job is decided one way or another.
In short.. Happy days continue until the administration has decided which way it will go. After that, my guess is that the FED will allow for a much needed correction...
I like the "promote a smooth transition" part of the QE end portion. A smooth transition from what to what? How do you promote such a transition?
Lubricants, my man... lots and lots of lubricants.
"They have one tool and it is a printer."
Nice, I LOL'd
I love this line:
The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.
But the prices have already fucking gone up! Who cares if they are wet or dry.
They denied inflation as oil gained $5-$10 a day last year. Never saw the credit market problems three years ago, and certainly do not see the cliff ahead now nor that the bus they are driving has no brake pedal.
Dixie (OT):
Thank you for the Martha Stout read recommendation. Picked it up Monday. So far it has been interesting and helped explain some interactions I have had with some coworkers in the past. Thanks again.
With consumer spending comprising approximately 70% of GDP, these constraints suggest that consumer spending will not lead any economic recovery.
His message was being spread and gaining even more support...therefore he needed
to be censored.
Until we have guys like Black back as regulators nothing will
change. We just
good articles;
target="_blank">my newest bookmarked finance website
Back out of QE? Admission of failure, or inability to keep pace as prime parasite among lessors?
See it to believe it. Unless a bank holiday or instant devaluation were the next game piece to play.
Recovery, said enough times, still isn't.
Is this a bit like the phrases well contained and contained but this time the economy is likely to remain weak for a time
make that it is in a real mess in fed speak
But $USD rallying at the moment, boy watch the $USD this afternoon
CNBC spinning this as good news...big surprise.
the ending of QE in October should mean a sign to sell...but I guess either I am the only smart one out there or I am living in the future.
It was interesting listening to Mickey Mouse on CNBC.
Unfortunately, being smart in a market full of morons is not a great trading strategy. Nothing worse than losing money for being "right" and having the market run you over.
I wish I had been seeing things oppositely since March. Instead of down 50%, probably doubled my money.
economic activity levelling out?
For goodness sake, I thought there were green shoots back in March, they should be big plants by now!
Not still flat earth?
almost autumn. green shoots turn to falling leaves
At least they did not say, " that being said".
technical note: this is the fomc policy statement. the fomc minutes are something completely different.
There's still a trillion+ of new debt issues on the docket. Not much has really changed.
Whole lot of words to say absolutely nothing. Extend and pretend policy. Think happy thoughts (puppy dogs and unicorns) and recovery will come.
I don't think you're far off. 99% of what the administration and the Fed have done has taken place with an eye toward "restoring consumer confidence" without actually fixing the problem. Think bank stress tests. So, they come out today and say things are "stabilizing", and removing QE implying that it's no longer needed and everything is returning to normal. This helps restore confidence in their eyes. Meanwhile, to Taleb's point, all they've done is waste shitload of money without accomplishing anything.
I think for them the "consumer confidence" is the actual problem. They already stated that there was nothing wrong with the banking system, so they are trying to fix the confidence. Not only Gramm seems to think that this is a mental recession.
This makes sense (for them). They are the elite, they exist only in this kind of world, so they are trying everything to keep it alive.
Problem is, they are wrong. Reality will prevail.
Bill Gross recommends short term AIG notes with TARP backing on heels of Fed statement. 15% with a government backstop = easy money. It's all good.
BofE increased QE market went up
Yeah. While the end of QE for Treasuries is certainly concerting. The Fed will still continue to buy MBS with money out of thin air until the end of the year... and there's no guarantee that we don't see another round of buying MBS in the trillions.
All this means is that Turbo Timmy is on his own come October. He faces either paying higher yields for new issuances, or tells Goldman to unwind the HFT-driven stock market rally.
My guess is that he will be on his knees at the Chinese Central Bank thrown, saying:
"See? We really do support a strong dollar. Your investments are good.".
Keeping in mind, in 2007 the Fed balance sheet consisted of $800B Reserve Note green-backs in circulation, with $800B in Treasuries. When the crisis hit, Fed sold Treasuries to buy various garbage (MBS, swaps, term auctions, etc), leveraged 4:1.
The QE simply added $300B in Treasuries back into the Fed balance sheet - expect them to continue to max out their leverage with another $1.2T in purchases. Actually, make that a little bit lower, considering that bath they must be taking on the AIG assets.
Zerohedge had a good graph of all this, but I can't find it. The Fed balance sheet posted today didn't separate out the securities in detail. :(
The FOMC should do the Catskills circuit. Their comedic skills are terrific. So when government spending continues to exceed tax receipts in October and beyond and no one wants to buy up our crappy debt, who's buyin?
Who's buyin'?
All those people who will get burned being the incremental buyers of equities at SPX 1000, as Goldman lays the reverse trade.
Why wouldn't a return of "flight to quality" work in this market?
now, will anyone have guts to turn the AWSOMO back and repeat the giant leap, so BFF @ CNBC can scream "an important support level has been reached?!?"
If I were long universe and had taken risk management seriously, I would be rather nervous.
Must keep up the Hopium. Otherwise everyone (especially boomers) will come to understand that all paper IOUs and bubble assets will not have a higher selling value than now for the rest of their lifetimes. And instantly, en masse, tender them to the market. Liquidity is essential to a retirement if the currency is under attack and assets are becoming unsalable.
Thus hopium is now policy. Herding bears by the FED/Treas cowboys.
Hi, Man, give me a break. I said I will not do it until I have to. Got it? BOE precedence, anyone?
How the Feds are giving Ginnie and FHA more money and in a highway transportation bill to boot. Our transparent govt. at work.
http://piggington.com/ramsey_su_has_real_estate_bottomed
"The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted."
In other words, first QE experiment to be phased out due to lack of funds on or before October 31. Discretion to initiate another is reserved to FOMC. But this is good for our hired hand day traders and momentarily for the dollar index.
was wondering that myself. thought it was a google finance glitch for a second. We just
good articles;
target="_blank">my newest bookmarked finance website
Can you say deflation?
Breaking News: SEC temporary bans deflation from the market reports vocabulary.
Treasury Upcoming Blog: we call for all patriotic citizens to report any abuse of the word "Deflation" on the blogosphere or otherwise to flag@sec.gov or robotflag@ustreas.gov
The Fed said nothing new in their statement yet CNBS is trying to spin it as the most positive statement that has ever been released.
It is truly sickening that all these media idiot can't relate factual information.
"Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit."
So 70% of the economy is constrained and soon to get worse. Yeah, all is good in FOMC world. Bank holiday coming soon?
FOMC statement for dummies:
To DXY--"Git up thar, bitch"
To Public--" 'sall better now"
To PDs--"slip yuh some qwon on the low,low"
Bernanke chooses a weaker dollar, further eroding personal consumption which is already on life support. Purchasing power and J6P get flushed due to either higher prices for energy and materials or lower relative wages. The Fed is the boa constrictor, and we're the rabbit.
How are both bonds and dollars rallying after this?
Equities are acting just...wrong.... Way too rational here. Why sell off on a delfation indicative FOMC statement when theyre supposed to be in opposite land?
sigh... nevermind.
But wait! Why is the ^%$# FED announcing this Quan Ease abatement AFTER they sell toxic,high price shit to investors? Basically they sold crap to Bond buyers high, with low yields and then announced that they were going to crash the 30 year bond auction later on. And NOT doing quantitative easing IS A GODDAMN interest rate hike, as yields will naturally soar! What a crock of poo.
1) sell short term notes high Tuesday in a falling market
2)Sell 10 year note to suckers Wed
3)Announce that there won't be FED buying of bonds after selling high
4)Screw buyers 5 minutes after auction close
5) Real rates set to go high as hell, bond prices will crash
6) Go on open market and buy bonds back from primary dealers who fronted the whole operation in the first place
7) Monetize and "ease" through the back door when no one looks 2 weeks later.
So, who is calling the cops here? Jesus H. Christ!
i love the bit about consumer spending stabilizing. ya hand out money on street corners like they did today in NYC, well, yeah, today spending is stable...people get to eat, and put shoes on their kids for school.
Let some air out of the balloon, blow in just a little to stop panic, let little more out. Where are we in this series?
Crash landing an air balloon in a tempest.
FOMC Policy in Idocracy speak.
Ok, well for one, we talked about it over some Brawndo, cuz that's what people crave, and even though shit looks fucked up, you're wrong, we, like, know what we're doing, and we're going to keep doing it, cuz you tards have lamer ideas.
Shit's going to get more expensive, but that's cuz it's worth it. Brought to you by Carl's Jr.
We're going to keep talking and drinking and thinking, and buying shit that's worthless cuz none of you tards are doing it, but in October, you are fucked for sure cuz we're practically broke.
Nice one, Mr. Solo.
I like money.
This being topsy turvey land, BoE increase QE market goes up,
Fed reduces... market soars
All in well in the land of make believe where stock prices go to the moon on no earnings
Hopium bubble alive and well
Last spurt on juiced 10y/mortgage correlation, 1.25 Trillion GSE prop, then slow burn down of curve from 30 yr back.
watch the fingers, 'n' getcher house Ious while you can, this window's closing.
Bernanke needs his 2/20 on this hedge fund he's a runnin'
The dollar has done a complete about face after it's post-FOMC rally, now back near session lows. To the moon and back in about 45 minutes.
Nothing to see here, keep it moving...
Anon. #34170 An interesting post, but what do you mean by "tender them"?
Would you mind stating that one sentence differently so I can better understand you? Thanks, Anon X
Not that anon, but sell is what they meant.
Peace.
Sioux economist:
Pale face banker man make many words of good sound. Say what sound like promise but no really. Wampum and blankets and cargo costem more beaver pelt. Make treaty to no more spend what no have. No lookem straight in eye. Smokem peace pipe with Chinaman. Do many lickspittle things but no can do all and make all happy.
No putem away war paint and ponies just now.
Red Cloud:
"They [Goldman Sachs] made us many promises, more than I can remember, but they never kept but one: they promised to take our land [money] and they took it."
If they were so confident in the economy, they wouldn't continue to QE. Actions and words aren't matching again.
Nobody said that the Fed wouldn't return to the QE bucket at a later date. You make it sound as if they will never, ever return in our lifetimes.
I really don't think my statement said anything to the sort. And actually, I think my intent matches up with yours better than whatever you thought I meant.
To put it plain as day: If someone is saying the economy is doing just fine, continuing to do QE for two more months seems like a lot for an economy that is "doing just fine." I would also imagine that if it worsened at all in that time frame they will keep QE going longer since its also required by an economy that is "doing just fine." And would really expect them to continue it almost forever and always resort to it until their policies no longer have any effect.
Best part for me is this bit:
"...resumption of sustainable economic growth..."
How can you *resume* something you haven't had in decades?
"How can I be out when I was never in?" -- Seinfeld
Selling debt is SO hard now. And instant devaluation so sexy. Ben's feeling that siren's seduction. He may soon swoon.
I'd argue that nothing special will happen in October.
Why? Because it would be consistent with everything that's already happening. Remember that almost everyone has agreed to pretend about many things regarding economic conditions. Fools like me aren't invited.
Should valuations get beaten down between now and then? Sure. I would argue the Free Money Express is driving equities valuations into the stratosphere. Astronomical accounting/finance ratios are the new normal.
I would postulate they've probably got something else in the works to replace the Free Money Express programs. I don't mean that in a zero_hedge paranoia way. More like a 'not accountable to the taxpayers program that's better than the last few only less transparent.'
When you parse this FED doublespeak and consider the true underlying fundamentals of the depression, this is a set-up for an enormous catastrophe, and soon. The USD action today alone is a key. Actions are louder than empty words. We are in a depression with an asset bubble. There is only one thing that can happen in the near future.
Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales.
BWAHAHAHAHAHAHAHAHAHA.....
Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.
BWAHAHAHAHAHAHAHAHAHA.....
...the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.
BWAHAHAHAHAHAHAHAHAHA.....aha, aha...BWAHAHAHAHAHAHAHAHAHA.....
I assume failure of straight faced test?
Failed at "Information received..."
Chumly,
I am sure you noticed the clarity on one of the Fed's primary missions, full employment.
Sure, with a little help from the BLS, maybe they can find a way.
WhoT!
Perhaps Ben would like to have Baghdad Bob seconded from the BLS.
"....by the end of October." Do any of you know why we've had so many stock crashes in October?
October is the month where the mood changes. Spring brings life and people are more generous, friendly, forgiving and more willing to take risk. Fall and Winter are the opposite. Markets are always a human thing, nothing changes.
edited first paragraph of fomc statment
Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out, but at a rate that confirms that our over-levered economy is in deep trouble. Conditions in financial markets have improved further in recent weeks, as the government funded, CNBC incited and Goldman Sachs executed short squeeze gained momentum. In the real economy, however, Household spending has continued to show signs, yes signs, but nothing definitive, of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. With consumer spending comprising approximately 70% of GDP, these constraints suggest that consumer spending will not lead any economic recovery. Given the bleak demand picture, businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. However given the lack of any evident pick-up in end demand, it is hard to see inventory builds supporting growth, as it has coming out of past recessions. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. Yes, friends, we are omnipotent.
The market is, for all intents and purposes, broken. Reboot. Reboot.
His message was being spread and gaining even more support...therefore he needed to be censored.
Until we have guys like Black back as regulators nothing will change. We just
good articles; my newest bookmarked finance website
Does anyone know how much of the $300 billion they have bought thus far?
circa 260 billion. Not much left, so the rate of firing must be slowing down significantly.
A decidely different interpretation of the FOMC meeting minutes today from one of my other favorite sites - a guest post from an alien (no not the illegal alien kind) poster to boot.
http://www.theoildrum.com/node/5665
Pete - Yes a shameless plug for TOD
Hey I'm a consumer and my confidence has never been higher. I only have one problem...I don't have any fucking money!
The title of the post is incorrect. The minutes are published separately several weeks following the meeting and recount the discussions amongst the various participants.
This statement is the policy directive which resulted from those discussions.
Just a little nomenclature for clarity.