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FOMC Minutes: This Is What It Sounds Like When Doves Cry, And When Others Start To See An Asset Bubble
It appears (as we noted here) that the size of the balance sheet, difficulty of the exit, frothiness of markets, and not-totally-dismal labor headlines have even the doves a little more hawkish about the possibility of an exit at some point - though obviously the minutes are clear that the 'flow' can increase (as well as decrease) based on the data.
- FOMC MINUTES: MANY SAID MORE PROGRESS NEEDED BEFORE SLOWING QE
- FED'S BROAD PRINCIPLES ON EXIT `STILL VALID,' FOMC MINUTES SHOW
- SOME ON FOMC WILLING TO SLOW ASSET PURCHASES AS EARLY AS JUNE
- SOME SAID "CONDITIONS IN CERTAIN FINANCIAL MARKETS WERE BECOMING TOO BUOYANT"
Two things seem clear: 1) the Fed is explicitly forcing the market to hope for bad data to maintain gains as the gap between market and reality is now too large for a soft-landing; and 2) the Fed has explicitly admitted that it is the 'flow' not the 'stock' that matters - as we have been vociferous about for years. But what is worst, is that now that some at the FOMC are openly seeing asset bubbles, Bernanke is facing a mutiny on his hands!
The exit seems closer than many expected...
Pre: ES 1666.5, 10Y 2.01%, Gold $1363.50, DXY 84.28
The key section from the Minutes:
Participants also touched on the conditions under which it might be appropriate to change the pace of asset purchases. Most observed that the outlook for the labor market had shown progress since the program was started in September, but many of these participants indicated that continued progress, more confidence in the outlook, or diminished downside risks would be required before slowing the pace of purchases would become appropriate. A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth; however, views differed about what evidence would be necessary and the likelihood of that outcome. One participant preferred to begin decreasing the rate of purchases immediately, while another participant preferred to add more monetary accommodation at the current meeting and mentioned that the Committee had several other tools it could potentially use to do so. Most participants emphasized that it was important for the Committee to be prepared to adjust the pace of its purchases up or down as needed to align the degree of policy accommodation with changes in the outlook for the labor market and inflation as well as the extent of progress toward the Committee’s economic objectives. Regarding the composition of purchases, one participant expressed the view that, in light of the substantial improvement in the housing market and to avoid further credit allocation across sectors of the economy, the Committee should start to shift any asset purchases away from MBS and toward Treasury securities.
And this:
A few members expressed concerns that investor expectations of the cumulative size of the asset purchase program appeared to have increased somewhat since it was launched last September despite a notable decline in the unemployment rate and other improvements in the labor market since then.
But without doubt, the punchline:
a few participants expressed concern that conditions in certain U.S. financial markets were becoming too buoyant, pointing to the elevated issuance of bonds by lower-credit-quality firms or of bonds with fewer restrictions on collateral and payment terms (socalled covenant-lite bonds). One participant cautioned that the emergence of financial imbalances could prove difficult for regulators to identify and address, and that it would be appropriate to adjust monetary policy to help guard against risks to financial stability.
Finally, after years of creating them, at least some at the Fed are seeing bubbles and more importantly, putting it in the transcript!
Full minutes (link):
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Market traded like a leak within past hour of FOMC minutes. Again!!
And yes, want the markets to root for bad new to have good news. Absurd manipulation at every turn. And "we" compliantly complacently go along. Come on mavens!
There are no markets. There are the FED markets controlled by QE, and that's it. The fact that QE is even talked about today as the centerpiece of the most "capitalist economy in the world" is a complete and utter JOKE.
MOAR QE!!! Let's get this free market economy to DOW 20,000 while my neighbor starves. Absolute circus joke the FED has become. Their actions prove to me that they are planning a financial revolution soon. No free market advocate would try to keep insolvent banks afloat for 5 years and not see that it ain't working.
"Buoyant". Fuck you Bernanke and fuck your vocabulary!
When doves cry. LOL. Love it.
Game. Blouses
http://www.youtube.com/watch?v=PaKHR6oe52Q
Roaches check in, but they don't check out.
No offense to any roaches.
Translated:
another paraphrase: The beatings will continue until morale improves.
another paraphrase: The beatings will continue until morale improves.
Seems like this is the beginning of the end
They will never let it end if they have a choice. It may be the end of the beginning but have no illusions, they will keep the theft going.
That's all they know-Bernank's biggest fear is lack of velocity of $/delation and w/o the Fed's $85B a month the game is over. This fucking "US depression expert" idiot is thinking that the US re-enters depression like in '37 because they took their foot off of the gas too early- he will try to avoid that "mistake" at all costs
Let's hope so. The suspense is killing me.
'Down goes Fraizer"
only lasted twelve rounds against "I am the Greatest." (so much for originality on my part.) next to Babe Ruth calling the shot probably the greatest sporting event in history...and one of the greatest media events ever as well. "a match in three parts."
Only Bernanke knows what the Fed is going to do.... well also GS, JPM, et al.... no worries non Fed committee traders will only find oiut fater the fact.
Thats how an effcient market works right Ben?
no more pomo tuesdays??? ;( Q.Q
The floor for flow? No show today....Monday will be fine....but bet on Tuesday as the hang overs abate.
gold 1200
Stop looking at things in an absolute way.
Gold at $800 would mean Dow at 8000.
Relativity, sir, relativity.
if that theory even holds anymore, everything is relative my friend until one day it isnt and correlations go away.
Correlations have been manipulated. Even the robots are confused. So, trade on correlations, charts and "info" at your carefully chosen peril.
.
Collapse always brings back correlations.
Collapse occurs because correlations disappear.
stop calling tops. talk investing STRATEGY. what's your PLAN. (insert evil laugh here.)
https://www.google.ca/finance?q=TSE%3AHOD&ei=DRGdUcC6K4niqAHyWA
My plan
Short REIT's.
Bubble is only financial paper. Gold is headed for high-700's, maybe lower. Read it and weep.
Paper equity racket could be anything at that time - anything.
Dow at 3k if gold at 500
Not weeks, days, I'm saying days, unless something major occurs internationally on the geostrategic side.
or perhaps, especially if something major occurs on the geostrageic side.
thinking this weekend?
never know
Not weeks, days, I'm saying days, unless something major occurs internationally on the geostrategic side.
Days? Lol
Economy has died. Literally, due to QE.
Order from white house must have arrived.
ekm how does collapsing a few pd's help the economy? Especially if there are insured deposits at those PD's?
Because claims on real goods and services and commodities are destroyed and the real stuff would be available for use, same as in 2008 when coil collapsed to normal $40
ekm please ignore James,
Relativity works two ways ekm. Put Crude at $50 and the dow at 8000 and people have lost 50% of their purchasing power even though commodities dropped 50%. That is a net break even and I'd argue it's a huge net loss to the consumer.
People have already lost the purchasing power.
Now they can only gain it when crude collapses.
Forget purchasing power. I am talking they will lose half of their net worth. There will be a lot less trips to disney world etc. when you cut the market in half. You could make gas free and people will still stay home.
Holding stocks is NOT net worth.
Those people will simply be decimated. Nobody cares about Vegas right now.
What gov is fearing is food riots.
Vegas? 19 trillion or whatever in 401k/IRA is not vegas. It's the baby boomers retirement plans. The baby boomers are the only ones who spend.
Too late. It's gone.
Suffering time
I am heading up to Rchester in August. I have a feeling a free beer is in your future.
LOL
I'm in Rochester. How about a three-way? That is, if you two are women, and hot, and oh, well, never mind. A couple of beers with two legends of ZH would be suitable. I also have a friend who is addicted to this site and he loves to drink (if we can get him to buy a round, it would be a coup).
Economy has died. Literally, due to QE.
Order from white house must have arrived.
Rest assured the world will still be here on Monday.
you are inferring imaginary premises, something one would only do if one had a predisposed bias towards a particular position.
did ekm ever say anything about the world "not being here"? c'mon, your reponse is childish and is exactly the sort of thing that makes perceptive ZH readers ignore you while paying close attention to posters like ekm. the latter just know how to bring it.
it meaning non-trivial content and well thought out, well articulated ideas.
you are inferring imaginary premises, something one would only do if one had a predisposed bias towards a particular position.
What nonsense are you on about?
People have been saying the end is 'a few days away' for many years now without any real argument why - it's ridiculous.
Certain people on here are organizing an ignore campaign against me (a new thing) because they can't argue my points on gold. 8 or so months ago while gold was still in a healthy position and goldbugs were calling for 2000 - 3200$ gold I wrote a couple long posts outlining why I thought gold was moving into a bear market. This sent goldbugs on here into a frenzy of fury but at this point they no longer can argue my thesis (as it's been totally correct) so now I guess they've decided to boycott.
it meaning non-trivial content and well thought out, well articulated ideas.
The more vocal commentators here *only* want herd mentality and confirmation bias, you'll discover this soon enough.
1) can't maintain an argument without straying off on tangential reasoning
2) still think of gold in terms of FRNs (as if the value exists in the latter rather than the former!)
3) yes, there is a secret campaign to ignore you! - i am part of the distraction unit, whose job is to not ignore you, in order to conceal the fact that we are all in on it.
fail.
2) still think of gold in terms of FRNs (as if the value exists in the latter rather than the former!)
What do you price it in? Apricots? Even the most ardent goldbugs price gold in $, I've never heard a goldbug declare gold is going to x barrels of oil. But many times I've heard X$ gold is just around the corner.
3) yes, there is a secret campaign to ignore you! - i am part of the distraction unit, whose job is to not ignore you, in order to conceal the fact that we are all in on it.
I thought you were referring to Fonz's thing directly. I'm not imagining it, see for yourself:
http://www.zerohedge.com/news/2013-05-22/post-fomc-market-scorned#commen...
What will be interesting is when we value dollars in terms of ounces. There's a reason why they call it FRACTIONAL reserve banking.
I guess this is where we have a fundamental disagreement then.
I think the economy is going to die no matter what and while I philosophically disagree with the actions of the Fed and the US government, I think they are really the only things keeping things propped up at this point.
It's not 1980. You can't raise interest rates to 20% when you have $16 trillion in debt.
Economy dies due to lack of energy, not due to lack of money.
I agree.
Peak oil is largely responsible for the problems. Plenty of other nonsense was and is going on, but that's the kicker.
If you want to collapse this phony economy as Peter Schiff rightly calls it, I understand the sentiment. However, it won't be pretty.
There are no solutions in life, there are only choices, usually bad choices
There are plenty of solutions to problems.
Peak oil and a system that requires exponential growth are a predicaments.
I'm concerned with buying time now and keeping things propped up as long as possible. I guess you want to get it over with. I guess that's where we fundamentally disagree then.
correct
"You can't raise interest rates to 20% when you have $16 trillion in debt." If existing debt gets almost completely monetized by the FED why couldn't you have a spectacular rise in rates. I can see the deficit being the issue there as new debt would be very expensive but how does existing debt prevent this. Sincere question :-)
How can they possibly stop while the US government is still running such massive deficits?
I'm legitimately asking.
Again. Relativity.
If US harms itself by 20% (for argument's sake), the rest of the world will be harmed by 50% (for argument's sake).
Relativity, never forget relativity.
They can't- rates must be suppressed AT ALL COSTS.
Nobody cares about rates if no gasoline in the car
"the Committee should start to shift any asset purchases away from MBS and toward Treasury securities."
this move down in gold is going to be something. $1,000? Time to get ready to buy with both hands?
some guys really are killers. Henry Morgantheau was one. He financed World War II using a type of QE...and no gold standard. that gold price never budged under his watch. we do not have that same level of commitment this time. while there are a multitude of asset bubbles out there "no one is running to gold." i would argue...STRONGLY...RUN AWAY.
I think there is no rush, UK dealers have inventory of Gold and Silver Bars and coins. Nearly bought again yesterday but decided to hold off. Looks like Silver is going back down through my average purchase price - but I had no plans to convert it back to fiat this decade anyway.
Other things I watch here in the UK are just not selling - Cars, property (especially CRE) any luxury recreation items - horses, boats etc - a lot of it is just not bid at all. No confidence, no velocity of money - outside central London anyway.
I think if we get another wake up shock to the downside it will take a long time for prices - inc PM`s to bounce back. But to get on EKM`s bandwaggon they will be `relatively` ok. However I think we may hover around here going nuts for a while yet.
The global and domestic economy are worsening and anyone doing the research knows it. All the hawkish talk is just a means of psychological governing to keep the bubbles from growing too fast in my opinion.
Looking at rail cars, the price of copper, gold and silver lately and so on, one could begin to believe that we are heading into a deflationary scenario, with stocks excluded from this for the time being. The dichotomy grows with each passing day.
Here are a few recent articles in support of the idea that the "recovery" isn't really a "recovery" as of yet:
(Production Falls as U.S. Feels Global Weakness: Economy)
http://www.bloomberg.com/news/2013-05-15/industrial-production-in-u-s-de...
"Just plain silly" - showing the disconnect between the US Macro Economic Index and the stock market.
http://www.zerohedge.com/news/2013-05-16/just-plain-silly
"Baltic Index Has Biggest Weekly Drop in Six as Ship Demand Slows"
http://www.bloomberg.com/news/2013-05-17/baltic-index-has-biggest-weekly...
Fed Texas Manufacturing Outlook Survey (Growth in Texas Manufacturing Activity Stalls
http://www.dallasfed.org/microsites/research/surveys/tmos/
"Empire State index turns south in May - Industrial output drops 0.5% in April"
http://www.marketwatch.com/story/empire-state-index-turns-south-in-may-2...
"PHILLY FED MANUFACTURING UNEXPECTEDLY PLUNGES INTO CONTRACTION"
http://www.businessinsider.com/philadelphia-fed-manufacturing-may-2013-5
Claims for jobless benefits rise sharply
http://www.usatoday.com/story/money/business/2013/05/16/jobless-claims-r...
I would also add that the recent "beat" in retail sales is largely attributable to "seasonal adjustments". This article looks at the data with a bit deeper magnifying glass than most of the main stream top line reporting.
Retail Sales Post Modest Beat Despite Ongoing Plunge In Gasoline Sales
http://www.zerohedge.com/news/2013-05-13/retail-sales-post-modest-beat-d...
The global economy impacts the US Macro economic outlook as well. Obviously there are hundreds of questions one might ask about global demand and supply but the biggest questions for me are related to Europe and China. Europe has fallen back into recession with a lot of human suffering accompanying this and China seems to have its own problems. Even Germany seems to have barely escaped recession.
All the jaw boning about "tapering" coupled with Japan's venture into massive QE of its own with little assurance from Draghi of the ECB about its own willingness to engage in actual QE, the dollar is being catipulted higher by the day (at least in relative valuation). Will this increase US imports and decrease exports? I would think so ultimately. It is obvious that international money is seeking the higher yields in the US equity markets as well and the cash conversion to buy US equities is a factor driving the dollar up.
Here are a few recent article titles in regard to the contracting growth and in some cases "just contraction" taking place in the global economy.
"Eurozone recession set to deepen as private sector shrinks for 15th month"
http://www.guardian.co.uk/business/2013/may/06/eurozone-recession-privat...
"China PMI barely Above Contraction; Chinese Stocks Slump as Manufacturing Slows"
http://globaleconomicanalysis.blogspot.com/2013/04/china-pmi-barely-abov...
Pretty much that. Exactly that. Economic growth is getting far worse.
How can you withdraw stimulus in the face of weakening?
Good post. All talk of "recovery" is merely a glib, stale LIE.
It's worse now than it ever was under Magoo. Central bankers have truly destroyed the market. It takes its direction from SEMANTICS.
THE FOMC HAS NO IDEA ON GOD'S GREEN EARTH WHAT TO DO NEXT.
Dat TNX
Oh yeah....MBS market sold out? Only super subprime left for next sucker?
When Dove's Cry
http://www.youtube.com/watch?v=5b1k4N2ci6E
wow... look at all the liquidity in the ES... (sac)
*SOME ON FOMC WILLING TO SLOW ASSET PURCHASES [FROM $85 BILLION TO $125 BILLION PER MONTH] AS EARLY AS JUNE
In other news, chocolate rations are set to go up.
In other words:
REDDDDDDDDDDDD!!!! REDDDDDDDDDDD!!!! REDDDDDDDDDD!!!
Any Questions?
FED Board: We cannot make up our minds, but we are having fun fucking with all of you.
T-10s are back over 2%. http://www.bloomberg.com/quote/USGG10YR:IND $ at 3 year highs. BTFD!
Off topic, but this is fairly interesting. There's been concerns this is a scam for a couple years, but details are starting to firm up:
http://www.extremetech.com/extreme/156393-cold-fusion-reactor-independen...
If this pans out, it'd be one hell of a black swan for energy markets. And nickel futures.
If QE = new flooring to cover up the rotting support structure underneath, then
this (like you said, if it pans out) = removing and replacing the entire foundation.
the term gamechanger won't do this justice if its legit.
Exit? I guess they're planning to shut down all overseas military facilities, means test SS and Medicare, limit SSI disability to actual disabilities, restrict snap cards to staples, eliminate all of the psychobabble agencies and programs, end the war on drugs, suspend interest payments, close down Fannie and Freddie, and sell off the USPS. Then they can exit.
It is really quite simple. There is so much debt that if the economy is allowed to deflate, it will collapse from a deflationary spiral. Bernanke knows this now. Too bad they were asleep at the switch before.
So his only choice is between bad and worse. The bad is QE. There will consequences. He's not so stupid as to not know this. Inflation will prevail. And it will likely be more than any of us have ever seen. But its that or pretty much certain collapse of the system.
Meanwhile, they have to keep smacking down PMs. Why? Becasue they can't allow momentum to grow and panic set in to ditch the dollar. That is his primary balancing act with this QE. How to get people to continue to have faith in the dollar. How? Keep the stock market moving up and protect bonds from selling off.
All this will likely go on until sometime after Japan fails. Then the reality and fear may form the tipping point.
Unconfirmed reports suggest victim was a soldier and may have been ‘beheaded’.
Woolwich, South East London
http://www.itv.com/news/
Well, maybe this means that we move from the 3rd to the 2nd iteration where good news is bad news. Nah! I'm sure the strategists at the primary stealers will train the muppets to move from the 3rd iteration directly to the 1st iteration where good news is also good news.
After the fed injects a little fear in the markets all of these talks of bubbles and asset tapering will give way to the need for moar QE. There is NO exit strategy outside of the big players using this opportunity to cash out and buy real tangible stuff.
LOL, more fed jawboning. They can't exit or curtail. If anything it's more QE.
Folks, see what their doing, no what they say.
They are trapped in the QE box and they know it, hence the jawboning.
It's QE until the US dollar dies and nobody wants it.
Usual FOMC posture issuing a very dovish statement (INCREASE or decrease) followed by apparently hawkish minutes.
By the way, since the Chairsatan spoke earlier, this time the minutes are just rotten garbage.
I'll believe that the FED is reducing QE when I see it. And with Kuroda on the rampage it's a mere illusion.
"the central bank could begin to taper the asset purchases in 'the next few meetings' if the data continues to improve."
Obviously the data will continue to deteriorate or stagnate (i.e unemployment), so asset purchases will have to continue.
Headfake bitchez!
Exactly.
Could someone please provide some info on the continuing 'improved data'.
Just ask one of your local Obama supporters, or any general ill informed American/sheep. They will clarify things for you.
and if they just stop having meetings, so be it.
At this point, it's all about 1660. Close under and there's trouble brewing.
Even if they adjust downward they are still monetizing debt. Let's face it, they will risk a collapsing stock market if they withdraw the punchball. There is no way of going cold turkey on quantitative easing. Everybody knows it.
The QE until and even through a crashing US dollar. Japan's first, then the US follows.
1. Bernake is leaving at year end. So, no change in policy or FLOW until the next head gets the blame in 2014.
2. The sell off is holiday related. VIX was bought and is out of sync with the index, we are witnessing some of the long VIXs being farmed.
3. Things all get back into balance on Friday morning when the final VIX longs will be closed and VIX will go down and the index up Friday.
I just bought some am buying XIV to hold thru Friday. See what happens
if ben leaves in january the fed is expecting holy hell to ensue in some form in 2014. that has been the pattern since the 70s.
Bye, bye, Bencoins?
.....any second now.....feel like a groundhog day star!
so this means if I buy TZA the market goes green
okay, got it.
Talk out of both sides of their collective mouth and smack PMs but NOTHING has changed.
Same fucking garbage occurred when Greenspan was chairman.
Greenspan spoke, markets jumped.
although i do not want to get my hopes up because i have so often in the past only to be disappointed, but this is a big day to finish red, even if it is slightly.
considering that the fed talk was pretty balanced, the dow was up as much as 150 at a point today or so, and the last time the dow was up that much and finished red was march 09.
this can be the beggining of the end.
a red close would make me feel better than the day we sold off 225 for italy election or day of boston marathon bombing.
lets hope for a red close and hopefully the tide will change
qe will continue until the multiplier picks up. given retail sales and mortgage apps and euro collapse and china slowdown(to 7.7% lol) the multiplier is not going anywhere soon so qeinfinity is here to stay.
the fed is just blowing foam off the head of their root beer float.
Once the computers realize their mistake, the market will be up big over the next day or two. Benny won't do anything for another year because the faulty economy, steered by The Dictator into the ditch, will not allow him. The silliness from the FED rivals the chicanery from Washington. Indeed, what a circus we are experiencing under the big top.
Fed can only do QE, play with rates, or jawbone. They are jawboning. Why? The results of their QE are proving embarrassing, as the S&P is simply rising too fast. So it's time to tap the brakes. Not by actually tapping the brakes but by saying, hey you guys, any minute now, we're gonna hit those brakes We Pinky Swear.
The flow must continue, and continue it will. Even if there is some minor adjustment to the flow in a given month, it will still be a form of jawboning only.
A blind man could see what they are doing.