FOMC Minutes: Hawkish Rumblings Getting Louder

Tyler Durden's picture




 

It would appear that even though the relative dovishness of the FOMC has increased, a realization that the party has to stop sometime is dawning on the PhDs - though for now, the printing will continue until morale improves...

  • SEVERAL FOMC PARTICIPANTS SAID EASING MAY PROMPT EXCESSIVE RISK
  • MANY FOMC PARTICIPANTS VOICED CONCERN ABOUT RISKS OF MORE QE
  • SEVERAL ON FOMC SAID FED SHOULD BE PREPARED TO VARY PACE OF QE
  • FOMC PARTICIPANTS SAID ECONOMY WAS ON 'MODERATE GROWTH PATH'
  • SEVERAL FOMC PARTICIPANTS SAW IMPROVED U.S. CREDIT CONDITIONS
  • A NUMBER OF FED OFFICIALS SAID TAPERING QE MAY BECOME NECESSARY

Pre-FOMC: ES 1521.00, 10Y 2.01%, EUR 1.3337, Gold $1580, WTI $94.18

Some of the key sections:

However, a few participants expressed concerns that the current highly accommodative stance of monetary policy posed upside risks to inflation in the medium or longer term.

On the death of Okun's Law:

A number of participants thought that the growth of potential output had been reduced in recent years, possibly in part because restrictive financial conditions and weak economic activity in the aftermath of the financial crisis had reduced investment, business formation, and the pace of adoption of new technologies. Many of these participants worried that, should the economy continue to operate below potential for too long, reduced investment and underutilization of labor could further undermine the growth of potential output over time. A couple of participants noted that uncertainties concerning both the level of, and the source of shifts in, potential output made it difficult to base decisions about monetary policy on real-time measures of the output gap.

But punchline #1:

Several participants emphasized that the Committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved. For example, one participant argued that purchases should vary incrementally from meeting to meeting in response to incoming information about the economy. A number of participants stated that an ongoing evaluation of the efficacy, costs, and risks of asset purchases might well lead the Committee to taper or end its purchases before it judged that a substantial  improvement in the outlook for the labor market had occurred. Several others argued that the potential costs of reducing or ending asset purchases too soon were also significant, or that asset purchases should continue until a substantial improvement in the labor market outlook had occurred. A few  participants noted examples of past instances in which policymakers had prematurely removed accommodation, with adverse effects on economic growth, employment, and price stability; they also stressed the importance of communicating the Committee’s commitment to maintaining a highly accommodative stance of policy as long as warranted by economic conditions. providing monetary accommodation by holding securities for a longer period than envisioned in the Committee’s exit principles, either as a supplement to, or a replacement for, asset purchases.

#2:

A few participants commented that the Committee’s accommodative policies were intended in part to promote a more balanced approach to risk-taking, but several others expressed concern about the potential for excessive risk-taking and adverse consequences for financial stability. Some participants mentioned the potential for a sharp increase in longer-term interest rates to adversely affect financial stability and indicated their interest in further work on this topic.

And #3:

Many participants also expressed some concerns about potential costs and risks arising from further asset purchases.

Another headfake from a Fed which will never, ever stop monetizing, or just more schizophrenia from Bernanke and Co? Why both of course.

And, in tangential news, this is what @Not_Jim_Cramer suspected the real minutes wordcloud looked like...

Full minutes:

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Wed, 02/20/2013 - 15:18 | 3260638 Bastiat
Bastiat's picture

Im afraid they broke Martin in prison and let him out to shill.

Wed, 02/20/2013 - 15:46 | 3260763 Mrmojorisin515
Mrmojorisin515's picture

i've thought that myself sometimes.  I like his cycles theory, but sometimes the dude is just hard to read and he claims hyperinflation will never occur

Wed, 02/20/2013 - 16:26 | 3260926 Imminent Crucible
Imminent Crucible's picture

I hope he's right. Hyperinflation produces complete devastation in a society. On the other hand, if the dollar goes down 10% to 15% per year like it did in the 1970's, gold and silver will do at least as well as they did back then. Might even bring the Hunt brothers out of retirement.

Wed, 02/20/2013 - 15:05 | 3260538 nobusiness
nobusiness's picture

tighter money will now be trumpeted as good news for the economy

Wed, 02/20/2013 - 15:08 | 3260562 donsluck
donsluck's picture

Just a PM take-down. Gold and silver crashed, but the Dow is relatively flat. With CBs buying gold, they need a lower price. If the stock markets follow the PMs, QE reassurances will follow.

Wed, 02/20/2013 - 15:18 | 3260639 Karlus
Karlus's picture

The big question is for those who have kept powder dry, where is the entry point?

I know max pain is just south of 1600....does that mean that we get a blip up Thurs/Fri before Monday expiry?

Wed, 02/20/2013 - 15:25 | 3260668 donsluck
donsluck's picture

I would expect a pop to 1650 in a couple of weeks. Wait for the Dow follow-thru before buying.

Wed, 02/20/2013 - 18:42 | 3261410 Imminent Crucible
Imminent Crucible's picture

Entry point?

Scroll down to the weekly chart view: http://stockcharts.com/freecharts/gallery.html?$GOLD

Gold has closed above $1550 in every trading session since the middle of 2011. Anywhere between today and $1560 is a bargain.

Wed, 02/20/2013 - 15:06 | 3260542 RationalPrepper
RationalPrepper's picture

May I remind everyone that they were talking exist strategy in February 2010.

http://www.cbsnews.com/2100-500395_162-6193834.html

Talk of raising rates in a matter of months...yeah...right.

Wed, 02/20/2013 - 15:06 | 3260544 kengland
kengland's picture

Now go back and looks the PM performance over the last month. Any connection?

Wed, 02/20/2013 - 15:15 | 3260622 Quinvarius
Quinvarius's picture

It is a giant short short position amongst the historically stupid money:

http://www.gotgoldreport.com/2013/02/got-gold-report-courtesy-release-of-our-entire-February-18-report-.html

My guess is this is some historically stupid pair trade involving gold and the S&P based on the "recovery".

Wed, 02/20/2013 - 15:07 | 3260547 nobusiness
nobusiness's picture

Shocker, someone just bought 1.8 million shares of SPY to save the market.

 

i wonder who that was.

Wed, 02/20/2013 - 15:07 | 3260548 Racer
Racer's picture

Oh so that is why gold has been falling... someone leaked the information to their pals

Wed, 02/20/2013 - 15:10 | 3260574 donsluck
donsluck's picture

We little guys cannot front-run. We can only react. This is a buying opportunity.

Wed, 02/20/2013 - 15:17 | 3260637 TWSceptic
TWSceptic's picture

Soros was informed as well.

Wed, 02/20/2013 - 15:19 | 3260648 Quinvarius
Quinvarius's picture

And the "pals" didn't even get the trade right.  They should have been buying gold...as they will soon discover.

Wed, 02/20/2013 - 15:07 | 3260551 DeadFred
DeadFred's picture

Trying to glean information from a press release that tries to make you think what they want to to think... Try the triple reverse whamo method. Or better yet be an insider and have Ben tell you what's up over lunch some day.

Wed, 02/20/2013 - 15:07 | 3260552 lemonobrien
lemonobrien's picture

if they're so brave, why don't they stop? Let me the first to inform you niggas, "we know you're fucked."

Wed, 02/20/2013 - 15:07 | 3260555 SDRII
SDRII's picture

Trading halt: Market awaits the Moscow Times Steve Liesman insights on the minutes. breaking: it is all bullish

Wed, 02/20/2013 - 15:08 | 3260556 Pooper Popper
Pooper Popper's picture

Banker season opening soon...

There will be no limits!

Wed, 02/20/2013 - 15:08 | 3260558 Bunga Bunga
Bunga Bunga's picture

1 is a number too.

Wed, 02/20/2013 - 15:08 | 3260559 Piranhanoia
Piranhanoia's picture

Where can I get this "beard oil" referred to in the vernacular?

Wed, 02/20/2013 - 15:08 | 3260560 Shell Game
Shell Game's picture

LOL.  If you pull out your microscope you can just read 'risk', too funny..

'Fuck you- Pay me!', 'Boehner will cry',  LMAO!  thx NJC

Wed, 02/20/2013 - 15:08 | 3260561 Cognitive Dissonance
Cognitive Dissonance's picture

Too freaking funny on the fake word cloud. Made my day. :)

Wed, 02/20/2013 - 15:25 | 3260669 Piranhanoia
Piranhanoia's picture

Can we be sure it is faked?

Wed, 02/20/2013 - 15:08 | 3260563 Duffminster
Duffminster's picture

Every 1% increase in interest rates creates an extra $150 Billion + in the US Federal Debt interest payment, which as we reach anything over 5% brings the US that much closer to default.  This is all jaw boning.   QE can never be ended. 

Wed, 02/20/2013 - 15:37 | 3260709 eclectic syncretist
eclectic syncretist's picture

Fucking Odoriferous Miscreant Cocksuckers

Wed, 02/20/2013 - 15:37 | 3260712 slightlyskeptical
slightlyskeptical's picture

But if the fed owns them all and gives their profit to the treasury what does it really matter? Add in the profits off the MBS over time and Uncle Sam is doing ok.

Wed, 02/20/2013 - 15:54 | 3260791 knukles
knukles's picture

Bingo!
Dead argument....
Fed collects coupon, remits same to Treasury.
Don't even need a shred of currency .... all electronic.

Wed, 02/20/2013 - 16:28 | 3260935 viahj
viahj's picture

wouldn't matter at all as long as you don't plan to use USDs in trade.

Wed, 02/20/2013 - 15:09 | 3260565 lolmao500
lolmao500's picture
  • *FOMC PARTICIPANTS SAID ECONOMY WAS ON 'MODERATE GROWTH PATH'
  • *SEVERAL FOMC PARTICIPANTS SAW IMPROVED U.S. CREDIT CONDITIONS

Are they on LSD or what?

Wed, 02/20/2013 - 15:11 | 3260587 donsluck
donsluck's picture

If they were on acid, they would have given up the farce and noticed how soft trees are.

Wed, 02/20/2013 - 15:13 | 3260591 Banksters
Banksters's picture

Gee, I thought they said that employment falling below 7.2 percent was their un qe standard -who cares how many people are falling off the rolls.

Wed, 02/20/2013 - 15:13 | 3260601 dick cheneys ghost
dick cheneys ghost's picture

tainted horse meat

Wed, 02/20/2013 - 15:40 | 3260702 McMolotov
McMolotov's picture

At Woodstock, it was specifically the brown horse meat that caused freakouts.

Wed, 02/20/2013 - 15:16 | 3260624 oddjob
oddjob's picture

Double squares for all.

Wed, 02/20/2013 - 15:12 | 3260569 Quinvarius
Quinvarius's picture

I guess you can now sell stocks and buy gold as opposed to just buying gold.

Wed, 02/20/2013 - 15:10 | 3260577 Jacque Itch
Jacque Itch's picture

"Moderate Growth Path"

GDP flat last quarter; lucky to hit 1% growth in Q1.  I'm sooo secure with these a** clowns in charge.

Wed, 02/20/2013 - 15:10 | 3260578 Caracalla
Caracalla's picture

Markets almost GREEN, lol

Wed, 02/20/2013 - 15:11 | 3260585 Confundido
Confundido's picture

One gets the feeling the Fed is clueless...

Wed, 02/20/2013 - 15:38 | 3260722 slightlyskeptical
slightlyskeptical's picture

They are not clueless. Their intrests are just different then the rest of ours.

Wed, 02/20/2013 - 15:12 | 3260593 FiatFapper
FiatFapper's picture

Gold back @ year open

Wed, 02/20/2013 - 15:51 | 3260781 Panafrican Funk...
Panafrican Funktron Robot's picture

Stocks to follow suit.

Wed, 02/20/2013 - 15:14 | 3260608 Charles Nelson ...
Charles Nelson Reilly's picture

fuck these pricks...

Wed, 02/20/2013 - 15:15 | 3260617 TWSceptic
TWSceptic's picture

Even their minutes are 100% market manipulation.

Wed, 02/20/2013 - 15:34 | 3260700 optimator
optimator's picture

I'm sure they sometimes say, "Off the record............"

Wed, 02/20/2013 - 15:16 | 3260623 FROZENOJFUTURES
FROZENOJFUTURES's picture

I TOLD YOU ABOUT GOLD, DOG! I WARNED YOU!

Wed, 02/20/2013 - 16:16 | 3260629 fuu
fuu's picture

Best word cloud ever.

1569.80 and 28.54 is all you got? I expected better from men of your education.

Maybe it's just lunch break.

Well Orly just a few weeks early.

Wed, 02/20/2013 - 15:17 | 3260635 SillySalesmanQu...
SillySalesmanQuestion's picture

Hmmm. news I've read the last week...housing starts down; ship, rail, truck traffic and freight shipping down; manufacturing down; GDP down; sales and earnings down; Wal-Mart down; FOXCONN, Apple, CAT down new car registrations in Europe down; China down, Europe down....must be....BULLISH, MUST BUY MOAR.

Wed, 02/20/2013 - 15:19 | 3260645 nobusiness
nobusiness's picture

Translation - All the FOMC members have completed the refinancings on their primary home and vacation property.  rates can now rise.

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