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FOMC Statement Post-Mortem
Goldman Sachs saw no major surprises in the May FOMC statement, which, as we noted in the redline, was very little changed from the March statement. The most notable change, however, introduced additional flexibility around purchases, noting that "the Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes." The slightly more aggressive nod towards fiscal policy "restraining" growth as opposed to "becoming restrictive" is perhaps yet another plea for some help from Washington - for, as we noted earlier, "the ability of a central bank, exclusively, without the rest of Washington doing any bit of the task, to turn an economy from a modest recovery to a robust one is an experiment that is untested - and will not prove to be successful."
Via Goldman Sachs,
MAIN POINTS:
1. The May FOMC statement was very little changed from the March statement. Most notably, the statement included one wholly new sentence: "The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes." We see this as introducing flexibility for the Committee, consistent with past statements from the Chairman and other Fed officials, rather than necessarily suggesting a near-term policy bias in one direction or the other. However, it may be notable that this sentence specifically refers to the pace of purchases, rather than the expected period of time over which purchases will continue, or the expected holding period of purchases.
2. There were also modest changes to the economic summary paragraph. According to the May statement, labor market conditions have shown signs of improvement only "on balance," probably a reference to the weaker March payrolls report since the last meeting. Fiscal policy "is restraining growth" rather than "has become somewhat more restrictive," a more direct characterization of the drag. There was no change to the inflation language, despite inflation readings softening over the intermeeting period. However, the new sentence about varying the pace of purchases implicitly recognizes the risk of inflation falling too low, raising the possibility that purchases could be increased if the current trend continues.
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The Squid has spoken.
<Time for the Muppets to line up (again) and bend over.>
Can I at least get a kiss with that broken promise?
Funny how it's those engaged in a global choke-hold that require more flexibility.
As if we aren't dying fast enough.
Nigel Farage has just repeated the clarion call to get your money out of the bank. He said EU banks however I say US...
Thievery, Bitches!
DaddyO
Yup. Austerity is coming to the U.S.
There are going to be some VERY pissed off folks when they realize that just because you generate a pulse does not mean you automatically deserve a big screen, nice car, health coverage, and paycheck.
Low Inflation low my a$$, Redbox is now $1.20, Candy Bars have trimmed 10% off to 'cut calories', and Salmon (locally) has risen enough for slight concern.
low inflation ONLY on things you don't actually need
May 1st - Time for the monthly inflation numbers (the real ones, determined with my own expenditures)
Year over Year:
Gas - down 2.55% Shazzam! It's a miracle.
Food - Up 11.14%
Household - Croikes, up 58.09% What the hell is the wife buying at Walmart.
Clothing- boyaah! up 28.45%.
Telephone / internet up 2.29%
Electric up 7.84%
Well, thank God those gas prices dropped or I'd really be screwed.
Considering the glut of fuel stocks, gas should be selling for much less than it is today.
So my belief is that gas should be less than 2,50 a gallon based on demand, but due to inflation it's way over $3.50 a gallon.
Low Inflation low my a$$, Redbox is now $1.20, Candy Bars have trimmed 10% off to 'cut calories', and Salmon (locally) has risen enough for slight concern.
Bingo, been that way for 2yrs now.On top of at least 10%+ Inflation, you are paying more for far less product.Factor in decreased portion sizes +10%, and you really at closer to 20%, or more.At ANY store I go to a Baked Chicken whole, a year ago, was $3.99/$4.99.
Now they are $6.00,and smaller.
"implicitly recognizes the risk of inflation falling too low, raising the possibility that purchases could be increased if the current trend continues."
Perhaps this QE is going to slow down sooner than many can expect
They said falling too low, not rising.
If anything it means that Ben (Yellen) is gonna need a bigger chopper. And with Yellen, well, that just goes without saying.
True, that's what they said. True also that most of the time they are utterly wrong on what they say/think (i'm not sure, but i think maybe they do it intentionally), so i would look very skeptically anything they write.
As for now this focm is letting the equities tank, and the dollar too seems not suffering soo much.
Edit:
And wtf downvote my comment, you QE addicts!
QE will never slow. Benji has said he will make it rain money from his helicopter if there is ever a slow down. The country could collapse and he'd give everyone a zillion dollars. There is no end to this. The more I see, the more I think hyperinflation is coming. I don't understand it, with wages falling and jobs disappearing, and endless handouts, etcc.... but somehow shit is costing a whole freaking lot. Maybe it's got something to do with the dollar being made worthless, i don't know.
What they only had that few words to say after the release? I would have thought they would have released a million word essay on the just released minutes and going into the finer details........
No question the Bernank is warming up the printer.
His "leadership" as chair ends January, 2014 - he wants to ensure his "legacy" with high stawk prices. Look for the $85 BILLION per month figure to increase so the house of cards can grow a little taller.
"Warming Up" would imply that it had cooled down, and as we all know, that poor printer runs 24/7/365
Well it's good to hear that goldman saw "no major surprises" in the fomc statement given that they wrote the fuckin thing.
You can fell the coming collapse. Hell, you can practically smell it on the streets.
May Day! May Day! The ship, she is sinking! The Dow...is down...over...one...hundred!
Must...QE...moar. Need...moar...dope...er...stimulus.
SOS - Stocks Overvalued Stupid.
It's 3:30 and we ALL know what happens at 3:30. Up up and away!!!
"more flexibility" = more uncertainty!
Dunno, I'd say the outcome is fairly certain, regardless of what actions they take.
I get your drift, though. Volatility makes wealth transfer that much easier.
Copy and paste
Ben phones it in while celebrating May Day with his brethren
They aren't making much of an effort in the fraud lately
The end game is nigh
"implicitly recognizes the risk of inflation falling too low, raising the possibility that purchases could be increased if the current trend continues."
Could someone please show me an inflation chart of the past 100 years and point out WHERE on that chart there has ever been "inflation that was too low"? A popping bubble does NOT constitute deflation! It's just a popping bubble! Since the creation of the "creature from Jekyll Island", inflation has been unidirectional -- UP!
Risk of too low to keep the ponzi properly inflated, that is.
It's this fuckin simple, with inflation investors chase yield and financial institutions fuck-em while collecting fees on top. With deflation, investors dis-intermediate by putting cash in the vault or buying physicals - no suckers nor fees for said financial institutions.
Cliff, S&P... S&P, Cliff. Nice to meet you.
Maybe the algos are writing the fed minutes now? Seems like the the plane is on autopilot and the rats have parachuted out already.
Pretty much what they said covers everything......nothing to trade on.....no specifics..just Banker mumbly jumbly....and nothing about the future...like a five year plan....this just covers till the next meeting...
Bingo...
Undoubtedly THE most bearish FOMC statement imaginable...Bulls were whispering about an INCREASE in asset purchases being announced...Now, Mario is next up, just in time to drive the stake of sentiment change through the heart of matters, and finally Friday Employment, or more accurately, lack thereof, throws the corpse in the body bag....
According to Bank of America Merrill Lynch:
FOMC: Standing in place
Fed buys itself time
In an implicit acknowledgment of the softening data, the FOMC today explicitly indicated that it is “prepared to increase or reduce the pace of purchases” as the labor market and/or inflation outlooks change. Several Fed officials in the week prior indicated their willingness to ease if data disappoint persistently. With the Fed missing on both sides of its dual mandate, we expect the Fed to continue to back away from a quick tapering to QE3. We expect the Fed will maintain the current purchase pace into early 2014, then taper gradually.
Little change in the outlook
The FOMC did not make much of a change to their assessment of the economy, citing a “moderate expansion” in activity and “some improvement, …on balance” in the labor market, despite a weak March employment report. They noted that fiscal policy “is restraining” growth (in March, it had “become somewhat more restrictive”). Modestly surprising was no change in their inflation assessment, despite their preferred PCE measure rising just 1.0% yoy in March. They retained their assessment of downside risks to the outlook.
Debate over purchase pace…
The main change to the statement was to open the door to adjust the pace of purchases, both up and down. The minutes, released in three week’s time, should give more indications of how the views of FOMC members are evolving on this issue. While our base case remains that the Fed will buy at the current pace well into next year, we see a growing chance that the Fed will scale up its buying before it tapers it lower.
… and over timing
Not only did the FOMC open the door for adding to their balance sheet at a faster pace, the support for an early taper among FOMC members has likely faded, in our view — again, the minutes will tell. Some have suggested the Fed should taper soon, to convince the markets that a stronger recovery is underway. We disagree: the Fed has stated that they will wait for labor market conditions to “improve substantially”; jumping the gun would be inconsistent with their past behavior and their public statements, and risks their credibility. Moreover, as the Fed does not want the markets to see this as a signal of the start of the broader exit, a gradual tapering seems more likely to us than a quick end. We expect that the Fed will start to slowly scale back the pace of QE3 purchases by April next year, when the accumulated data should point to a real recovery, and will conclude buying by October 2014. But if growth and, especially, inflation continue to surprise to the downside, the risk that the Fed will buy more would rise.
Alcoa to Review 460,000 Metric Tons of Smelting Capacity for Possible Curtailment
http://www.businesswire.com/news/home/20130501005196/en/Alcoa-Review-460...
"NEW YORK--(BUSINESS WIRE)--Alcoa (NYSE: AA) announced today that it will review 460,000 metric tons of smelting capacity over the next 15 months for possible curtailment to maintain the Company’s competitiveness, as aluminum prices have fallen more than 33 percent since their peak in 2011.
The review will include facilities across the Alcoa system and will focus on higher-cost plants and plants that have long-term risk due to factors such as energy costs or regulatory uncertainty. The possible curtailments could affect 11 percent of Alcoa’s global smelting capacity.
Currently, the Company has 13 percent, or 568,000 metric tons of smelting capacity idle."
Any possible global recovery is about to get face-fucked.
"Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation "...
Read, "this shit ain't working and we really haven't a fucking clue what to do now"...
Chairman Ben not Shalom said no growth is due to washington cut .. Hahaha Funny ,
US didn't collapse only by printing toilet paper US$
One day this joke gonna end very BAD
Head Shot trainee is needed
http://www.bloomberg.com/news/2013-05-01/u-s-stock-futures-little-changed-before-fed-statement.html
Record High
The S&P 500 climbed 0.3 percent to a record high of 1,597.57 yesterday as consumer confidence jumped and investors bet central banks around the world will continue their efforts to stimulate the economy. The bull market in U.S. equities has entered its fifth year, surging 134 percent from a 12-year low in 2009 on better-than-estimated corporate earnings and three rounds of bond purchases by the Fed.
Why does "Austerity" mean cutting jobs over cutting saleries?
http://in.reuters.com/article/2013/05/01/usa-fed-idINDEE94002820130501
In response to a deep financial crisis and recession, the Fed cut overnight interest rates to effectively zero in late 2008. It has also bought over $2.5 trillion in assets, more than tripling its balance sheet, to keep long-term rates low.
If the economy's fortunes do not improve, the central bank may well look for fresh ways to boost its support to the economy, and increasing the amount of assets it is buying is just one option.
The Fed could announce an intent to hold the bonds it has bought until maturity instead of selling them when the time comes to tighten monetary policy. Fed Chairman Ben Bernanke has already raised this as a possibility.
Policymakers could also set a lower unemployment threshold to signal when the time might be ripe to finally raise rates. Currently, the threshold stands at 6.5 percent, provided inflation does not threaten to breach 2.5 percent.
Research suggests such "forward guidance" about the future path of interest rates can have a strong impact on current borrowing costs, and one Fed official -- Narayana Kocherlakota, president of the Minneapolis Federal Reserve Bank -- has already suggested lowering the threshold to give the economy a boost.