FOMC Minutes Released: Dissension To QE4EVA Growing

Tyler Durden's picture




 

While some were concerned at the Fed's new quantitative targets as suggesting early tightening, it appears (from the FOMC Minutes) that those fears were somewhat warranted (with most seeing QE ending in 2013):

  • *FED SAYS A FEW ON FOMC WANTED QE UNTIL ABOUT THE END OF 2013
  • *FED: SEVERAL ON FOMC BACKED QE HALT OR CUT WELL BEFORE 2013 END
  • *ALMOST ALL FOMC MEMBERS SAW POTENTIAL QE COSTS AS INCREASING

The punchline: "several" means more than just QE4 hater Jeff Lacker are turning hawkish. Though, even with the risks, they want moar. Pre-FOMC Minutes: ES 1460, 10Y 1.86%, EUR 1.3108, Gold $1674. Post: ES -6pts, 10Y +5bps, EUR -40 pips, Gold -$10.

 

Here is the punchline from the report:

In their discussion of monetary policy for the period ahead, all members but one judged that continued provision of monetary accommodation was warranted in order to support further progress toward the Committee’s goals of maximum employment and price stability. The Committee judged that such accommodation should be provided in part by continuing to purchase MBS at a pace of $40 billion per month and by purchasing longer-term Treasury securities, initially at a pace of $45 billion per month, following the completion of the maturity extension program at the end of the year. The Committee also maintained its existing policy of reinvesting principal payments from its holdings of agency debt and agency MBS into agency MBS and decided that, starting in January, it will resume rolling over maturing Treasury securities at  auction. While almost all members thought that the asset purchase program begun in September had been effective and supportive of  growth, they also generally saw that the benefits of ongoing purchases were uncertain and that the potential costs could rise as the size of  the balance sheet increased. Various members stressed the importance of a continuing assessment of labor market developments and reviews of the program’s efficacy and costs at upcoming FOMC meetings. In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases. Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial  stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted.

Full FOMC minutes (link)

FOMC Mins December

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Thu, 01/03/2013 - 17:42 | 3120109 Harbanger
Harbanger's picture

We were already the United states before that genius.

Thu, 01/03/2013 - 15:16 | 3119581 nope-1004
nope-1004's picture

+1.  QE can't end.  Their press release is a total facade.

 

Thu, 01/03/2013 - 15:21 | 3119598 cougar_w
cougar_w's picture

+1 head fake

Might suggest that things are starting to seriously come unwound over at The Fed.

I tell you though, you'll know they are serious about endinging QE right after there is a whisper rumor started that "not all sovereign debt is equally important" meaning selective default is in the cards.

Thu, 01/03/2013 - 15:24 | 3119609 Raymond Reason
Raymond Reason's picture

They would love to end QE, but that's the paradox.  The central bank as their means to power, is the same bank that is destroying their power.  You should try being an oligarch sometime, it's not all coke and dames you know. 

Thu, 01/03/2013 - 16:05 | 3119797 spastic_colon
spastic_colon's picture

spot on...today is just a test to see what jobs number they need to report tomorrow

Thu, 01/03/2013 - 15:06 | 3119525 punxsutawney phil
punxsutawney phil's picture

SHORT GOLD!!!!!! EASY MONEY NOW

Thu, 01/03/2013 - 16:54 | 3119594 WhiteNight123129
WhiteNight123129's picture

I am very happy with my Short Treasuries, but I will short Gold when real interest rates are POSITIVE again* sorry. Now the good news is that long bond rising while teh short end will go possible lower, means that inflation is going to rise faster than the long bond yield. No need to short Gold now.

Before now you had a currency devaluation, not inflation. Inflation is something else. Dearness is money in the hands of the consumer  while cheapness is money in the hand of the capitalist. So the capitalist sells his bond and spends it instead of hoarding it. It ends up in the hands of the consumer and dearness follows.

And it looked like prices of foreign used goods (energy, and soft commodities) was creating inflation. But you had no inflation so to speak, just currency going down. Now we should see the multiplier rise and quite a bit. That will wacke financial assets and raise nominal GDP.

Fullarton is of great help indeed. Rising nominal long rates is inflationary while declining nominal long rates are deflationary. The declining long rates encourage the increase in financialization (removing money from circulation to go into finanical assets or leveraging), the rising long rates encourage the spending of financial assets into the circulation (deleveraging).

Devaluation can occur with flat yield curve, inflation needs steeper yield curve.  We are having it now.

Printing is the cause of future inflation, and the smart gold bugs bought the printing which also creates negative yield.

Sell your Gold when interest rates are at 7%, official inflation is at 9% and INFLATION OUT OF CONTROL is the headline on New York Times.

Too early to sell.

 

THAT BEING SAID SINCE YIELD WILL STEEPEN FIRST, CAUSING INFLATION LATER, YOU COULD SEE REAL RATES GO FLAT FIRST,  CAUSING KNEE JERK SELLING IN GOLD AND THEN INFLATION COMING AND REAL RATES GOING RIGHT BACK NEGATIVE AND THEN GOLD RALLIES AGAIN.

Knee jerk selling could start now in Gold.

 

 

 

 

 

Thu, 01/03/2013 - 15:24 | 3119613 Stuart
Stuart's picture

Shareholders need to get their miners to stop delivering into the exchanges, stop enabling paper gold manipulators of dictating the price.  Any Gold co manager reading this, take your gold and stockpile it like Rob McEwen used to do it.   Until then, gold miners are just patsies being played as chumps.

Thu, 01/03/2013 - 15:27 | 3119633 oak
oak's picture

during Mr. obama's 1st presential term, the s&p500 up 600 points approximately and the au price almost doubled. what will happen in his 2nd term, you think?

Thu, 01/03/2013 - 16:11 | 3119762 Anasteus
Anasteus's picture

And now go long gold and easy money again...

But I understand your pleasure. If you're good at scalping and you know when to stop to withdraw the cash and buy physical then you're following probably the best investment strategy these days.

Thu, 01/03/2013 - 15:06 | 3119526 dynomutt
dynomutt's picture

Time to let the sand out of the hourglass?

Thu, 01/03/2013 - 15:13 | 3119564 1100-TACTICAL-12
1100-TACTICAL-12's picture

Double dawg dare'em, to turn off the QE spigot..

Thu, 01/03/2013 - 15:19 | 3119527 ekm
ekm's picture

Bullshit.

Only Obama can call that shot. He may have already signed the executive order to crap the market.

Thu, 01/03/2013 - 15:06 | 3119528 unplugged
unplugged's picture

Yet more deception & propaganda, all they have left besides the CTRL-P button.

Thu, 01/03/2013 - 15:06 | 3119531 Snakeeyes
Snakeeyes's picture

But they will be tempted to push down Treasury and mortgage rates again given sagging mortgage purchase and refi applications. Central planning at its WORST!

http://confoundedinterest.wordpress.com/2013/01/03/happy-new-year-mortga...

Thu, 01/03/2013 - 15:07 | 3119534 Stuart
Stuart's picture

Chinese say round eyes stupid as fuck.

Thu, 01/03/2013 - 15:14 | 3119571 ZerOhead
ZerOhead's picture

Round eyes say slanty eyes love treasuries...

Thu, 01/03/2013 - 15:08 | 3119540 Dr. Engali
Dr. Engali's picture

Darn and the transports were within striking distance of a new high. Better send some trains across border a few hundred moar times for moar tax credits.

Thu, 01/03/2013 - 15:09 | 3119543 Kreditanstalt
Kreditanstalt's picture

Oh-oh...!  The end of cheap "money"!  BUY GOLD!

(A logical person would THINK...!)

Thu, 01/03/2013 - 15:10 | 3119547 punxsutawney phil
punxsutawney phil's picture

Sold to you.  Down $100 tomorrow

Thu, 01/03/2013 - 15:11 | 3119551 Kreditanstalt
Kreditanstalt's picture

Buy paper dollars then...BE A LEMMING.

Thu, 01/03/2013 - 15:14 | 3119566 Kreditanstalt
Kreditanstalt's picture

Too bad!  It seems to have bounced already...

Thu, 01/03/2013 - 15:15 | 3119574 punxsutawney phil
punxsutawney phil's picture

Nice bounce, 1600 one touch tomorrow?

Thu, 01/03/2013 - 15:19 | 3119579 Kreditanstalt
Kreditanstalt's picture

Impossible, against all fundamentals and illogical...the bounce was $1663+/-

Thu, 01/03/2013 - 15:39 | 3119690 punxsutawney phil
punxsutawney phil's picture

Look at that my 1500 puts just doubled.  Wonder why somebody paying up so much for those

Thu, 01/03/2013 - 16:02 | 3119784 GMadScientist
GMadScientist's picture

Don't blame em, Phil...all that shiny gets in their eyes!

Thu, 01/03/2013 - 16:52 | 3119947 Kreditanstalt
Kreditanstalt's picture

Some twit who believes that gold is a "risk asset", maybe? 

Thu, 01/03/2013 - 17:28 | 3120064 punxsutawney phil
punxsutawney phil's picture

Any investment in which you are not guaranteed to get back your initial investment (even measured against other assets) is a risk.  Gold will have its day well above 2000, for sure.  But don't be fooled into thinking it can't go to 1200 before making its last hoorah.  This is very long game our CB's are playing.

Thu, 01/03/2013 - 17:38 | 3120095 Kreditanstalt
Kreditanstalt's picture

At the end of the games and manipulations, I will still have exactly the same number of ounces.  Supply and demand profile.  

Gold demand (for the real, unlevered metal, not 'puts', options, 'calls', ETFs, loans or GLD...) is steady-to-insatiable while supply is far, far more limited p/a than for your paper.

WE, not the market manipulators, are playing the long game.

Thu, 01/03/2013 - 15:09 | 3119544 Chupacabra-322
Chupacabra-322's picture

Worth a third post:

These people are Criminals and Treasonist. They're protecting a Global Criminal economic bankster enterprise system that controls the world's Governments and politcians. It's a criminal cabal based on shadow CIA/Mossad/MI6 etc.. intelligence, murder, espionage, blackmail, rackertering, bribery, threats, drug trade, human trafficing. It's a Global Criminal Cabal based on an Evil Lucerferian belief system.

The rest is just political therater for consumption by the masses.

Thu, 01/03/2013 - 16:53 | 3119590 Kreditanstalt
Kreditanstalt's picture

Not exactly.  More like evil global governments are protecting a confidence-based and corrupt financial Ponzi whose prime beneficiaries are, not at all surprisingly the politicians' biggest backers.

Thu, 01/03/2013 - 15:09 | 3119546 edifice
edifice's picture

QE will never end; it's mathematically impossible for it to. They may call it something different, put Cntrl-P will continue.

Thu, 01/03/2013 - 15:13 | 3119562 dwdollar
dwdollar's picture

Yep, just like politicians claiming their gonna make cuts any day now...

The Ponzi must continue to inflate at all costs.

Thu, 01/03/2013 - 17:50 | 3120128 Bicycle Repairman
Bicycle Repairman's picture

Default?

Thu, 01/03/2013 - 15:10 | 3119548 TheDarkKnight
TheDarkKnight's picture

The Titantic has hit the iceberg, everyones scrambling for the lifeboats.

 

 

Thu, 01/03/2013 - 15:11 | 3119550 kito
kito's picture

dissension growing....ha...ha........members are just ensuring their "objections" are duly noted before all hell breaks loose...........they want to make sure the pitchforks and torches arent headed to their abodes.....................we all look forward to the end of qe3456...........cant wait to see the federal government fund its debt when the interest rates revert to the mean........................cant wait to see housing return to true market conditions when the fed stops purchasing mbs.......oh boy, what a day that will be!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Thu, 01/03/2013 - 15:14 | 3119570 Dr. Engali
Dr. Engali's picture

Hey kito I saw some of your predictions you gave to fonz yesterday. As a deflationist you don't really expext the dow to hit a new all time high do you? How does that jive with your thesis?

Thu, 01/03/2013 - 15:28 | 3119635 kito
kito's picture

hey doc, i dont expect any type of deflationary tsunmai to occur this year....so until then, the excess liquidity may continue to find its way into the markets..................i have a david stockman outlook.......that one day, the enitre market of everything, wayyyyy overbought with digital dollars and leverage,  will be crushed........i say 2015....not before..................

Thu, 01/03/2013 - 15:44 | 3119691 Dr. Engali
Dr. Engali's picture

Well personally I don't believe the market will ever touch it's old highs let alone an inflation adjusted high unless they hyperi-nflate.

Thu, 01/03/2013 - 15:29 | 3119652 cougar_w
cougar_w's picture

The price of the Dow is not connected to any real or fundamental thing now.

But deflation is real enough and is set to eat us alive from the inside, leaving a lovely husk of a market corpse for the algos to palpate with their wee tentacles.

Thu, 01/03/2013 - 15:36 | 3119679 Dr. Engali
Dr. Engali's picture

I know thw DOW has no fundamental value, but if you're a deflationist you have to believe the market will be taken down along with the destruction of debt. The Japanese have tried propping the market up for years fighting deflation but the market forces push the NIKKEI lower.

Thu, 01/03/2013 - 15:40 | 3119695 kito
kito's picture

the value of the DOW is certainly fundamental to TPTB holding their influence on the world.................and the market would implode along with everything else that has been absorbing digital dollars............just not this year...............

Thu, 01/03/2013 - 15:11 | 3119552 Carl LaFong
Carl LaFong's picture

Here's the money quote:


In their discussion of monetary policy for the period ahead, all members but one judged that continued provision of monetary accommodation was warranted in order to support further progress toward the Committee’s goals of maximum employment and price stability. 

 


Virtually unanimous support for QE to infinity. What else does one need to know? All the rest is MOPE.

Thu, 01/03/2013 - 15:12 | 3119559 robnume
robnume's picture

Plunge Protection Team, FOAD!!!!! And I command you to take the entire U.S. financial system with you!!!

Thu, 01/03/2013 - 15:13 | 3119561 John Law Lives
John Law Lives's picture

"In their discussion of monetary policy for the period ahead, all members but one judged that continued provision of monetary accommodation was warranted in order to support further progress toward the Committee’s goals of maximum employment and price stability."

Price stabliity.  Thanks for the laugh, Chairsatan.

Thu, 01/03/2013 - 15:17 | 3119584 Racer
Racer's picture

He doesn't know the meaning of the word 'stability' like he didn't know the meaning of the word 'contained'

Thu, 01/03/2013 - 15:14 | 3119568 Yen Cross
Yen Cross's picture

 XAU is getting Jack Hammered! Down over $23 on some dumbass moodys comment.

Thu, 01/03/2013 - 15:28 | 3119611 Anasteus
Anasteus's picture

and JPM's due diligence.

Thu, 01/03/2013 - 15:18 | 3119569 MFLTucson
MFLTucson's picture

This is a group of liars because no one is buying our debt.  Outright fucking lie and I have had enough of this group of shit manipulating these markets and Gold inn particular.  Get these Jews the hell out of this country and out of this money, they are the devil!

Thu, 01/03/2013 - 15:30 | 3119659 retiringteach
retiringteach's picture

you're not good enough to eat a jew's shit-redneck asshole!

 

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