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FOMC Minutes, And Goldman's Take: Improving Economy Not Enough To Remove QE

Tyler Durden's picture





 

No reaction on the FOMC minutes, as expected, which basically say that despite the "economic improvement" the Fed does not have confidence in the eceonomy to remove QE. Also, QE is supposedly successful because rates went up, even though the whole purpose of QE is to get rates down. Total idiocy.

Here is Goldman's take on the FOMC minutes:

MAIN POINTS:

1. Perhaps the best single sentence in this document is the one that immediately precedes the vote on the directive to the New York Fed for its intermeeting operations: "With respect to the statement to be release following the meeting, members agreed that only small changes were necessary to reflect the modest improvement in the near-term economic outlook." In this regard, we remember expecting the committee to upgrade its view only modestly and finding that the upgrade was, if anything, a bit more cautious than we anticipated.

2. These minutes confirm that tone throughout. Indeed, somewhat to our (small) surprise, the staff forecast for growth changed little on balance for 2011 and 2012 as the incorporation of a more accommodative set of fiscal was essentially offset by the growth inhibiting effects of lower home prices and housing activity and higher oil prices and interest rates. Committee members were likewise cautious in their upgraded views on growth. While concerns about deflation abated and some expressed the usual concerns about possible upside surprises, the overwhelming sense was that inflation would remain low and progress toward the committee's twin objectives of high employment and somewhat higher inflation was disappointingly slow. Accordingly, with the expected dissent of Kansas City President Thomas Hoenig, the committee saw no reason to change policy settings.

Full minutes below:

 

 


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Tue, 01/04/2011 - 15:08 | Link to Comment 101 years and c...
101 years and counting's picture

status quo, bitchez!

 

Tue, 01/04/2011 - 15:12 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

Buy the f-in dip you f-in bitchez

Tue, 01/04/2011 - 15:10 | Link to Comment uno
uno's picture

nice!!!

Tue, 01/04/2011 - 15:08 | Link to Comment Misean
Misean's picture

We made a bunch of numbers go wonky but average up by reducing the size of the measuring stick.  We're friggin geniuses.  QE3 here we come!

Tue, 01/04/2011 - 15:09 | Link to Comment Turd Ferguson
Turd Ferguson's picture

I know all my PM friends are hurting today. I hope this helps:

http://tfmetalsreport.blogspot.com/2011/01/support-levels.html

Tue, 01/04/2011 - 15:13 | Link to Comment sheeple
sheeple's picture

not just pm, crude is down big time as well

they have been lock-step recently...

Tue, 01/04/2011 - 15:15 | Link to Comment unwashedmass
unwashedmass's picture

i defy anyone to name a banana republic with more exciting markets than our Comex metals!!!! I mean, can we have a standing O for what went on this morning?

Tue, 01/04/2011 - 15:46 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

AU and AG took the stairs up -- and the elevator down to the fuckin' parking lot basement.

The Morgue wants to put out the metals blaze by pouring a gasoline on the fire.

Like I told my father over vacation: Stocks isn't investing, its speculation; like going to Vegas with rigged tables and games ontop of probabilities against you.

Tue, 01/04/2011 - 15:23 | Link to Comment Misean
Misean's picture

Why would I be hurting.  I buy, take delivery, put em in the vault...sure, sometimes I like to pull out a pile of gold and silve bullion and roll around in it, which can be painful if one is a bit too exhuberant...still, there's nothing else that's a store of value out there at present.

Tue, 01/04/2011 - 15:29 | Link to Comment unwashedmass
unwashedmass's picture

 

actually i took advantage this morning, bought two more 100 oz bars. Comex can kiss good bye to that ....its not much, but....guess what Jamie? its gone.

Tue, 01/04/2011 - 15:29 | Link to Comment fuu
fuu's picture

Nothing like a Fed subsidized sale to start the New Year off right.

Tue, 01/04/2011 - 15:34 | Link to Comment Kaiser Sousa
Kaiser Sousa's picture

Turd -

thanks but no its no solace...what happened today was some aggregious bullshit...and then the Fed comes out some stupid ass nonsensical jawboning lunacy...

they expect an appreciating dollar but increases inflation?????

interest rates moving higher due to increased economic recovery????? fuck man, we're on our own....

 

 

Tue, 01/04/2011 - 15:34 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

A real fraudulent ass-whoopin'

Tue, 01/04/2011 - 16:16 | Link to Comment razorthin
razorthin's picture

Gap filled.  Glad that's over.

Tue, 01/04/2011 - 16:26 | Link to Comment Pegasus Muse
Pegasus Muse's picture

Just another opportunity to back up the truck.  Latched on to some physical Ag for less than $30/oz.  Picked up some miners at 10% discount.  Thanks JPM -- you thieving SOBs.

Tue, 01/04/2011 - 15:10 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

...despite the "economic improvement" the Fed does not have confidence in the economy to remove QE.

There will never be enough confidence to remove QE. It might go into stealth mode but it will never disappear. Pandora's box has been opened.

Tue, 01/04/2011 - 15:14 | Link to Comment mikla
mikla's picture

+1

They have the power to print.  That is their relevance.  To stop printing is to stop being relevant.

Of course, it's also somewhat irksome that it's a ponzi, so they have to print or it all comes down now.  (Instead, it will come down tomorrow.)

Tue, 01/04/2011 - 15:15 | Link to Comment Boilermaker
Boilermaker's picture

It makes no sense to shut the barn door after the horses get out.

I guess you have to be from Indiana to 'get it'.

Tue, 01/04/2011 - 15:26 | Link to Comment packman
packman's picture

There will never be enough confidence to remove QE. It might go into stealth mode but it will never disappear. Pandora's box has been opened.

 

Speaking of stealth mode QE - has ZH ever discussed the "Other Treasuries Issues" miscellaneous bucket for Fed accounting of treasuries?  Specifically - this being a bucket of securities for which there is no announced owner, and a bucket that has grown by leaps and bounds the past couple of years:

2008 Q4: $49.4B

2009 Q4: $573.2B

2010 Q3: $894.5B

There was an article a year ago on the subject (see link below), but it seems to have dropped off the radar for some reason, even though the number has continued to grow.

http://www.sprott.com/Docs/MarketsataGlance/12_2009_MAAG.pdf

This is from the flow of funds data L.209 item 7.  Note that this is outside of official QE - which is under the "Monetary Authority" category (line 12), and also separate from banks, foreign holdings, etc.  Line 7 is specifically called out as being "miscellaneous".  $894 Billion is a heck of a lot of miscelleanous - seems to me.

 

Tue, 01/04/2011 - 15:36 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Tyler covered it when the Sprott article hit the wires and I've seen references to it now and then in other articles about FED bond buying. Maybe it's time for an update as a solo article.

Tyler, could you get the bloodhounds unleashed and take another look? 

Tue, 01/04/2011 - 15:37 | Link to Comment Arius
Arius's picture

yeah well, another trillion or so...not much in the bigger scheme of things - but yes, another bag of worms.

it will be interesting to see how many suckers are still left above the water to be sucked by GS through this latest facebook scam...

Tue, 01/04/2011 - 15:47 | Link to Comment Arius
Arius's picture

meanwhile the ship is fastly sailing into the dark...sorry, could not resist posting this "unrelated" item; the number in only one day is equal to almost a month in 2009 - the main question is for how long can they keep it up?

here is the post:

U.S. Mint sells nearly 1.7 million silver American Eagle coins on 1st business day of 2011

Meanwhile, a total of 34,662,500 one-ounce American Eagle silver bullion coins were sold in 2010, up from 28,766,500 one-ounce silver bullion coins sold in 2009.

Tue, 01/04/2011 - 15:11 | Link to Comment Ragnarok
Ragnarok's picture

They will continue to print until the end.

Tue, 01/04/2011 - 15:14 | Link to Comment Boilermaker
Boilermaker's picture

Yea, that's right.  Just like all fucking crooks, you keep going until you can't and the cover-up keeps getting more absurd and extreme.

Tue, 01/04/2011 - 15:13 | Link to Comment Boilermaker
Boilermaker's picture

This is great news!  Things are still god-awful shitty!  The market is sure to rise!

Wait...what kind of crazy ass shit is this?

Here comes the rally that started it's linear march upward at 12:45 on the dot.  Let's keep that fucker going up!!!

Tue, 01/04/2011 - 15:14 | Link to Comment John McCloy
John McCloy's picture

QE until bubble reformation.

Fed intervention ends.

Markets collapse shortly after.

Media calls it a recession after 3 years of "Recovery"

Sell Sell..Panic Panic Panic.

Fed resumes purchases.Rinse and repeat and pretend these are "normal" business cycles.

 Each interval is shorter, requires more debt and destroys more wealth.

Tue, 01/04/2011 - 15:13 | Link to Comment NOTW777
NOTW777's picture

time for a new slogan ala summer of recovery

Tue, 01/04/2011 - 15:14 | Link to Comment MarketTruth
MarketTruth's picture

And the Fed says, "Blah blah blah... we will keep gaming the system with helicopter dollars to infinity.... blah blah blah".

Tue, 01/04/2011 - 15:15 | Link to Comment 101 years and c...
101 years and counting's picture

when the Fed openly admits they crave inflation, and will attempt to print it, what waterhead would buy bonds paying 3.3% over 10 years???

 

 

Tue, 01/04/2011 - 15:19 | Link to Comment Boilermaker
Boilermaker's picture

What about treasuries other than TIPS?

Tue, 01/04/2011 - 15:29 | Link to Comment Oquities
Oquities's picture

i've owned some for years that pay me 3 7/8% plus inflation.  they're much more expensive now. there are corporate variable-rates, investment grade, that have fixed coupons paired with inflation add-ons.  look around.

Tue, 01/04/2011 - 15:33 | Link to Comment thepigman
thepigman's picture

Actually, they basically divide into
3 camps now, which is the same as
saying they have no fucking idea where
they are.

Tue, 01/04/2011 - 15:16 | Link to Comment LeBalance
LeBalance's picture

Golly gee...we got that there E-CON-OM-ic improvement.

Thanks when we have new factories and such popping out of everywhere and folks are moving "on up," creating a new middle class.

Young men and women coming out of high school and colleges see the skies of opportunity as "bright, bright, bright!!!"

/sarcasm, if you needed to be told./

Tue, 01/04/2011 - 15:17 | Link to Comment Buyz_da_dips
Buyz_da_dips's picture

picked up a slug of SSO on the pullback.  been working well for me since last August. Big POMO day tomorrow.  Smellin' another green close.

Tue, 01/04/2011 - 15:17 | Link to Comment bigdumbnugly
bigdumbnugly's picture

i kinda thought commodities (esp. gold and silver) would have reacted a little better - or at least quicker - to this news.  what am i missing? 

Tue, 01/04/2011 - 15:24 | Link to Comment mynhair
mynhair's picture

A position, perhaps?

Tue, 01/04/2011 - 15:29 | Link to Comment bigdumbnugly
bigdumbnugly's picture

don't know how you would infer that from what i wrote, but...

metals are now inching back - just thought the qe news was exactly what that market would want to hear and that it would rebound faster from today's clobbering.

Tue, 01/04/2011 - 15:46 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

So maybe metals were intentionally stepped on because metals would see the continuing QE as good news. A "correction" was expected anyway and it would be perfect cover.

Oh, that's right. There is no manipulation in Gold or Silver.

Tue, 01/04/2011 - 15:52 | Link to Comment Arius
Arius's picture

there you go...now you are almost there....boxed IN

congrats!

it took you time but better late than never.... :-)

Tue, 01/04/2011 - 15:24 | Link to Comment Ese Pinche
Ese Pinche's picture

I dont think you are... my opinion at least... this is an excellent indicator of weakening.

Tue, 01/04/2011 - 15:21 | Link to Comment Caviar Emptor
Caviar Emptor's picture

As seen in The Matrix:

Spoon boy: Do not try and analyze the market. That's impossible. Instead... only try to realize the truth. 
Neo: What truth? 
Spoon boy: There is no market. 
Neo: There is no market? 
Spoon boy: Then you'll see, that it is not the market that moves, it is only  The Bernank.

Tue, 01/04/2011 - 15:28 | Link to Comment MarketTruth
MarketTruth's picture

+1

Tue, 01/04/2011 - 15:47 | Link to Comment buzzsaw99
buzzsaw99's picture

+QEinfinity

Tue, 01/04/2011 - 15:22 | Link to Comment bigdumbnugly
bigdumbnugly's picture

well, starting to turn now... but only a little

Tue, 01/04/2011 - 15:20 | Link to Comment Oquities
Oquities's picture

every paragraph on the first few pages starts on a positive note except housing and more mildly commercial re.  admittance of bad housing, jobs, and de-levering is later.  propaganda. meaningless.

Tue, 01/04/2011 - 15:22 | Link to Comment WineSorbet
WineSorbet's picture

And now back to your regularly scheduled melt up.  Just buy the f-ckin dips!

Tue, 01/04/2011 - 15:21 | Link to Comment WineSorbet
WineSorbet's picture

And now back to your regularly scheduled melt up.  Just buy the f-ckin dips!

Tue, 01/04/2011 - 15:27 | Link to Comment bob_dabolina
bob_dabolina's picture

Well thats a big fuckin' surprise.

 

Bernanke is so smart he should be a hedgefund manager.

      -AIG Quant

Tue, 01/04/2011 - 15:26 | Link to Comment mynhair
mynhair's picture

AVL was trading a buck higher in pre-market.  Just sayin'.

Tue, 01/04/2011 - 15:29 | Link to Comment docj
docj's picture

Benron's Boys must think there's still some blood to be drawn from the American middle class' stone.

Tue, 01/04/2011 - 15:28 | Link to Comment packman
packman's picture

Dollars to donuts the Fed's keeping an eye on the housing data - and knows that even though the "economy" (e.g. corporate profits) is improving, they know what's coming.

Tue, 01/04/2011 - 15:29 | Link to Comment mberry8870
mberry8870's picture

Disturbance in the short term funding market is a precursor to trouble. The Fed has 35% of any security is troubling. These guys are no different than the highest leveraged, ST funded  hedge fund.

Tue, 01/04/2011 - 15:28 | Link to Comment topcallingtroll
topcallingtroll's picture

Silver is crashing! The top is in! Sell out now before it is too late and you lose everyhing!

Tue, 01/04/2011 - 15:39 | Link to Comment mynhair
mynhair's picture

Thanks for the warning.  Jumping on SLW.

Ok, GLL gone, now show me 36.30!

Crap, settled for 36.33.

Grrrr.....

Tue, 01/04/2011 - 15:43 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

topcallingtroll says the top is in.

So if a troll's name itself says that the top is in everyday he/she posts, is it actually a contrary sign when he/she actually calls a top? Sort of like double secret probation or No means Yes?

Tue, 01/04/2011 - 15:46 | Link to Comment mynhair
mynhair's picture

Yes.  No.

U pick.

Tue, 01/04/2011 - 15:31 | Link to Comment HarryWanger
HarryWanger's picture

Green light for equities spelled out again for those who still haven't gotten this into their thick heads. Look at AAPL again. The march toward $400.00 is in place firmly.

Tue, 01/04/2011 - 15:35 | Link to Comment mynhair
mynhair's picture

Duh.  Fraud on parade.

Tue, 01/04/2011 - 15:36 | Link to Comment thepigman
thepigman's picture

Green light for wanking. The fed

says they haven't a clue what will

transpire.

Tue, 01/04/2011 - 15:43 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Your getting rather shrill and insulting Harry. Do not bend to the pressure. Show no fear or anger in the face of the doubters. Take another hit on the bong and calm down.

Tue, 01/04/2011 - 15:46 | Link to Comment Rogerwilco
Rogerwilco's picture

An honest appraisal might say the march of the bag holders continues. Unless you believe that the losses on the bad debts can be ignored.

Enjoy the playground they built especially for smart little MFs like you. Recess is sooo much fun, and it lasts forever...

Tue, 01/04/2011 - 15:50 | Link to Comment mynhair
mynhair's picture

Get real.  Some moron on CNBS actually said this morning that it is irresponsible to talk about Dow 4000, as it scares the Sheeple, and just might keep them from performing their bag holder duty.

Meethinks he was serious.

Tue, 01/04/2011 - 15:55 | Link to Comment Arius
Arius's picture

harry - AAPL is old news...the new theme Facebook didn't you get the memo?

Tue, 01/04/2011 - 15:33 | Link to Comment SheepDog-One
SheepDog-One's picture

Because the only reason for any 'economic improvement' is the Q/E pumps, therefore the monetization cant ever end.
Yes we have economic improvement from trillions pumped into Wall St for free, and yes that can not be removed.

Tue, 01/04/2011 - 15:35 | Link to Comment wiskeyrunner
wiskeyrunner's picture

This website is toast, they keep spewing gloom and the market spits in there face.

Tue, 01/04/2011 - 15:35 | Link to Comment SheepDog-One
SheepDog-One's picture

Fuck off then, go buy some stocks.

Tue, 01/04/2011 - 15:41 | Link to Comment mynhair
mynhair's picture

Yes.  Another fukking dip up to 3pm.

Tue, 01/04/2011 - 15:41 | Link to Comment Dr. Porkchop
Dr. Porkchop's picture

What about the chocolate ration? Are they increasing the chocolate ration?

Tue, 01/04/2011 - 15:42 | Link to Comment mynhair
mynhair's picture

Just the goobermint cheese ration is doubled.  So sorry.

Tue, 01/04/2011 - 15:46 | Link to Comment thepigman
thepigman's picture

When you have three separate camps

on the fed,  they are acknowledging they

have no friggin idea what's happening.

 

Tue, 01/04/2011 - 15:52 | Link to Comment thepigman
thepigman's picture

No wonder the bernanks voice quivers.

He's in the "we'll just keep doing

stuff and see what happens" camp.

Very reassuring.

Tue, 01/04/2011 - 15:57 | Link to Comment thepigman
thepigman's picture

Bonds don't like the admission that they

have no clue.

Tue, 01/04/2011 - 16:02 | Link to Comment Sophist Economicus
Sophist Economicus's picture

This just in on Bloomberg:

 

ALL IS WELL

 

whew, economic catastrophy averted

Tue, 01/04/2011 - 16:43 | Link to Comment docsdoc
docsdoc's picture

As long as Ben's "invisible hand" keeps stroking the market...

Tue, 01/04/2011 - 17:02 | Link to Comment Convolved Man
Convolved Man's picture

You mean not one attendee at the FOMC meeting cracked a joke about Ben's 60 Minutes interview?  Surely someone said Ben needed to work on his poker face or take composure lessons before his next appearance in front of a live audience.

Tue, 01/04/2011 - 17:26 | Link to Comment Buttcathead
Buttcathead's picture

Benny should just pay a million bucks per share for everything and shut the stawk market down.

Tue, 01/04/2011 - 17:40 | Link to Comment Iam Rich
Iam Rich's picture

All I have to say is this is....

WIN  WIN

Wow, the economy is growing and we get more stimulus.  This is like Goldilocks or something.

Tue, 01/04/2011 - 20:31 | Link to Comment metaforge
metaforge's picture

YAWN.... wake me up when QE3 starts.

Tue, 01/04/2011 - 20:44 | Link to Comment psyclopz
psyclopz's picture

And gold plummets for another opportunity..

Tue, 01/04/2011 - 23:45 | Link to Comment dcb
dcb's picture

the way to translate any banker statement is to take QE/economy and turn into bonus.

e.e the economy (my bonus) is too fragile to take away QE

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