Federal Reserve Bank

The head of the San Francisco Federal Reserve Bank on Tuesday said he would be open to another of round asset purchases if inflation trends were to fall significantly short of the U.S. central bank's target. Although he said it would take a big shift in the U.S. economic outlook for the Fed to restart its bond buying, John Williams said the possibility of a new downturn in Europe and other global economic woes pose a risk to the United States. "If we really get a sustained, disinflationary forecast ... then I think moving back to additional asset purchases in a situation like that should be something we should seriously consider," Williams said in an interview with Reuters.

This week has seen some market volatility (see VIX Chart) reminiscent of the functioning market from days of old. The markets are spooked, bad news is overtaking good news and bearish views are becoming vogue. We are seeing a titanic battle taking place between the various bull and bear camps and they are starting to unleash some serious firepower. 

Federal Reserve officials have become more concerned about weak growth overseas and the impact of a strengthening U.S. dollar on the domestic economy, warns WSJ Fed-whisperer Jon Hilsenrath, adding that, the stronger currency, by reducing the cost of imported goods and services, could hold U.S. inflation below the Fed’s 2% objective. Fed staff also reduced its projection for medium-run growth in part because of these concerns. The minutes showed more clearly than before that concerns about global growth and the disinflationary impact of a strong currency are giving officials additional pause about moving quickly on rates.

The “Doomsday Book” is essentially a private compilation of emergency measures that the Federal Reserve could take in the event of a financial crisis or other market-destabilizing event. The book has never been made public. But Fed officials have refused to release it, and Justice Department officials at a court hearing on Tuesday said the Federal Reserve Bank of New York wanted to keep the book under seal.

"The concept of an independent central bank clearly focused on price stability is neither old-fashioned nor outdated," exclaimed Bundesbank head Jens Weidmann. As The WSJ reports, he criticized the European Central Bank’s decision to buy private-sector bonds and signaled his fierce opposition to purchasing government bonds, underscoring his reluctance to back additional stimulus measures to combat weakness in the eurozone economy. "There is a risk of monetary policy, especially in the euro area, being held hostage by politics," Mr. Weidmann said, tying fiscal policies together through ECB bond purchases “is a dangerous path,”

If by means of monetary pumping one could strengthen the economic growth then it would imply that - by means of monetary pumping - it is possible to create real wealth and generate an everlasting economic prosperity. This would also mean that world wide poverty should have been erased a long time ago. After all, most countries today have central banks that possess the skills to create money in large amounts. Yet world poverty remains intact. The artificial boosting of the demand by means of monetary pumping leads to the depletion of the pool of real wealth. It amounts to adding more individuals that take from the pool of real wealth without adding anything in return - an economic impoverishment.

• How you know it is all a lie: Pelosi Presses Obama to Talk Up Stronger U.S. Economy (BBG)
• Secret Goldman Sachs Tapes Put Pressure on New York Fed (NYT), Uh, no they don't
• Clashes Break Out at Hong Kong Protest Site (WSJ)
• N.Y. Fed Lawyer Says AIG Got Billions Without Paperwork (BBG)
• Ebola’s Disease Detectives Race to Track Others Exposed (BBG)
• UPS, FedEx Want Retailers to Get Real on Holiday Shipping (WSJ)
• No more mailman at the door under U.S. Postal Service plan (Reuters)

No, it's not a joke or sarcasm. The Fed-whispering Jon Hilsenrath has penned the first strawman sponsoring Ben Bernanke for the Nobel Prize...

Something quite "crazy" indeed (not our words).

Here it is.. the Fed's buying guide for October. The Federal Reserve Bank of New York has released its $10 billion open market purchase plans... and the buy-into-the-weekend trade may get dented as there are no POMOs on a Friday in October.  After October 28th, equity bulls are on their own with their 'fundamentals' as its game over for QE.

Back in June 2011, Zero Hedge first posted: "Exclusive: The Fed's $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went" Of course, the conformist, counter-contrarian punditry promptly said this was a non-issue and was purely due to some completely irrelevant micro-arbing of a few basis points in FDIC penalty surcharges, which as we explained extensively over the past 3 years, has nothing at all to do with the actual motive of hoarding Fed reserves by offshore (or onshore) banks, and which has everything to do with accumulating billions in "dry powder" reserves to use for risk-purchasing purposes. Fast, or rather slow, forward to today when none other than the WSJ's Jon Hilsenrath debunks yet another "conspiracy theory" and reveals it as "unconspiracy fact" with "Fed Rate Policies Aid Foreign Banks: Lenders Pocket a Spread by Borrowing Cheaply, Parking Funds at Central Bank"

"The Markets Group at the Federal Reserve Bank of New York manages the size and composition of the Federal Reserve System’s balance sheet consistent with the directives and the authorization of the Federal Open Market Committee (FOMC), supports debt issuance and debt management on behalf of the U.S. Treasury, provides foreign exchange services to the U.S. Treasury and provides account services to foreign central banks, international agencies and U.S. government agencies. Markets Group is establishing a presence at the Federal Reserve Bank of Chicago and has openings for both experienced professionals and recent graduates.

The ongoing gold accumulation strategy by Russia, Kazakhstan and other ex Soviet states is a reserve diversification strategy. It may also be an attempt to undermine western markets and the vulnerable COMEX gold market in the U.S. It is likely a coordinated monetary policy, since Russia and Kazakhstan are members of the Eurasian Customs Union along with Belarus. 

The Federal Reserve Bank of New York (FRBNY) has built a new crystal ball (technically a DSGE model) as part of its efforts to forecast the U.S. economy. In part 1 of a week-long series - to provide some background on the model, its use for policy analysis and forecasting, as well as its forecasting performance - they briefly discuss what DSGE models are and explain their usefulness as a forecasting tool.

Onehawk down, and just as rates are supposedly set to begin rising. Smart.