FOMC Minutes: This Is What It Sounds Like When Doves Cry, And When Others Start To See An Asset Bubble

Tyler Durden's picture


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.


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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Wed, 05/22/2013 - 14:05 | 3588682 CClarity
CClarity's picture

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!

Wed, 05/22/2013 - 14:16 | 3588727 nope-1004
nope-1004's picture

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.


Wed, 05/22/2013 - 14:31 | 3588803 flacon
flacon's picture

"Buoyant". Fuck you Bernanke and fuck your vocabulary!

Wed, 05/22/2013 - 15:02 | 3588984 Kiss My Iceland...
Kiss My Icelandic Ass's picture



When doves cry. LOL. Love it.

Wed, 05/22/2013 - 17:27 | 3589450 silverserfer
Wed, 05/22/2013 - 14:19 | 3588755 FL_Conservative
FL_Conservative's picture

Roaches check in, but they don't check out.


No offense to any roaches.

Wed, 05/22/2013 - 14:32 | 3588842 Chupacabra-322
Chupacabra-322's picture
  • Translated:

  • Wed, 05/22/2013 - 15:45 | 3589172 TexasAggie
    TexasAggie's picture

    another paraphrase: The beatings will continue until morale improves.


    Wed, 05/22/2013 - 15:45 | 3589173 TexasAggie
    TexasAggie's picture

    another paraphrase: The beatings will continue until morale improves.


    Wed, 05/22/2013 - 14:06 | 3588688 spaceduck
    spaceduck's picture

    Seems like this is the beginning of the end

    Wed, 05/22/2013 - 14:08 | 3588701 Colonel Klink
    Colonel Klink's picture

    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.

    Wed, 05/22/2013 - 14:24 | 3588765 otto skorzeny
    otto skorzeny's picture

    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

    Wed, 05/22/2013 - 15:11 | 3589027 Kiss My Iceland...
    Kiss My Icelandic Ass's picture



    Let's hope so. The suspense is killing me.

    Wed, 05/22/2013 - 14:07 | 3588692 ZippyBananaPants
    ZippyBananaPants's picture

    'Down goes Fraizer"

    Wed, 05/22/2013 - 14:27 | 3588813 disabledvet
    disabledvet's picture

    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."

    Wed, 05/22/2013 - 14:07 | 3588693 Clowns on Acid
    Clowns on Acid's picture

    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?

    Wed, 05/22/2013 - 14:07 | 3588694 JJ McApe
    JJ McApe's picture

    no more pomo tuesdays??? ;( Q.Q

    Wed, 05/22/2013 - 14:07 | 3588697 Ban KKiller
    Ban KKiller's picture

    The floor for flow? No show today....Monday will be fine....but bet on Tuesday as the hang overs abate.

    Wed, 05/22/2013 - 14:07 | 3588698 mattdubz86
    mattdubz86's picture

    gold 1200

    Wed, 05/22/2013 - 14:09 | 3588708 ekm
    ekm's picture

    Stop looking at things in an absolute way.

    Gold at $800 would mean Dow at 8000.

    Relativity, sir, relativity.

    Wed, 05/22/2013 - 14:10 | 3588716 mattdubz86
    mattdubz86's picture

    if that theory even holds anymore, everything is relative my friend until one day it isnt and correlations go away.

    Wed, 05/22/2013 - 14:14 | 3588732 CClarity
    CClarity's picture

    Correlations have been manipulated. Even the robots are confused. So, trade on correlations, charts and "info" at your carefully chosen peril.

    Wed, 05/22/2013 - 14:15 | 3588736 CClarity
    CClarity's picture


    Wed, 05/22/2013 - 14:21 | 3588782 ekm
    ekm's picture

    Collapse always brings  back correlations.

    Collapse occurs because correlations disappear.

    Wed, 05/22/2013 - 14:29 | 3588829 disabledvet
    disabledvet's picture

    stop calling tops. talk investing STRATEGY. what's your PLAN. (insert evil laugh here.)

    Wed, 05/22/2013 - 15:14 | 3589036 Widowmaker
    Widowmaker's picture

    Short REIT's.

    Wed, 05/22/2013 - 15:11 | 3589026 Widowmaker
    Widowmaker's picture

    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.

    Wed, 05/22/2013 - 15:29 | 3589104 ekm
    ekm's picture

    Dow at 3k if gold at 500

    Wed, 05/22/2013 - 14:08 | 3588700 ekm
    ekm's picture

    Not weeks, days, I'm saying days, unless something major occurs internationally on the geostrategic side.

    Wed, 05/22/2013 - 14:11 | 3588719 thelibcentury
    thelibcentury's picture

    or perhaps, especially if something major occurs on the geostrageic side.

    thinking this weekend?

    Wed, 05/22/2013 - 14:14 | 3588733 ekm
    ekm's picture

    never know

    Wed, 05/22/2013 - 14:27 | 3588814 James_Cole
    James_Cole's picture

    Not weeks, days, I'm saying days, unless something major occurs internationally on the geostrategic side.

    Days? Lol

    Wed, 05/22/2013 - 14:29 | 3588833 ekm
    ekm's picture

    Economy has died. Literally, due to QE.

    Order from white house must have arrived.

    Wed, 05/22/2013 - 14:34 | 3588852 fonzannoon
    fonzannoon's picture

    ekm how does collapsing a few pd's help the economy? Especially if there are insured deposits at those PD's?

    Wed, 05/22/2013 - 14:40 | 3588871 ekm
    ekm's picture

    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

    Wed, 05/22/2013 - 14:52 | 3588906 fonzannoon
    fonzannoon's picture

    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.

    Wed, 05/22/2013 - 14:56 | 3588952 ekm
    ekm's picture

    People have already lost the purchasing power.

    Now they can only gain it when crude collapses.

    Wed, 05/22/2013 - 14:58 | 3588960 fonzannoon
    fonzannoon's picture

    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.

    Wed, 05/22/2013 - 15:01 | 3588980 ekm
    ekm's picture

    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.

    Wed, 05/22/2013 - 15:04 | 3588994 fonzannoon
    fonzannoon's picture

    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.

    Wed, 05/22/2013 - 15:10 | 3589022 ekm
    ekm's picture

    Too late. It's gone.

    Suffering time

    Wed, 05/22/2013 - 15:17 | 3589055 fonzannoon
    fonzannoon's picture

    I am heading up to Rchester in August. I have a feeling a free beer is in your future.

    Wed, 05/22/2013 - 15:18 | 3589061 ekm
    ekm's picture


    Wed, 05/22/2013 - 17:00 | 3589385 FreeNewEnergy
    FreeNewEnergy's picture

    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).

    Wed, 05/22/2013 - 14:40 | 3588872 James_Cole
    James_Cole's picture

    Economy has died. Literally, due to QE.

    Order from white house must have arrived.

    Rest assured the world will still be here on Monday. 

    Wed, 05/22/2013 - 14:52 | 3588936 thelibcentury
    thelibcentury's picture

    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.



    Wed, 05/22/2013 - 15:06 | 3589004 James_Cole
    James_Cole's picture

    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.

    Wed, 05/22/2013 - 15:33 | 3589117 thelibcentury
    thelibcentury's picture

    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.


    Wed, 05/22/2013 - 15:46 | 3589175 James_Cole
    James_Cole's picture

    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:

    Do NOT follow this link or you will be banned from the site!