Goldman's FOMC Post-Mortem: "Relatively Neutral" But "December Taper Possible"

Tyler Durden's picture


Considering Jan Hatzius and NY Fed's Bill Dudley are close Pound & Pence drinking buddies, when it comes to assessing what the Fed "meant" to say, one should just throw the embargo-minutes penned Hilstanalysis in the garbage and just focus on what the Goldman chief economist thinks. His summary assessment: the minutes were relatively neutral, March is the most likely first taper date although "December is still possible."

From Goldman:

We see the October FOMC meeting minutes as relatively neutral. Members generally did not appear to believe that tapering would be warranted in the immediate term at the time of the meeting, although that was before some recent better-than-expected data. There was discussion of potential enhancements to the forward guidance, but no consensus. We continue to think that March is the most likely date for the first reduction in asset purchases, although December is still possible.


1. With respect to the forward looking outlook for asset purchases, the minutes stated "some [members] pointed out that, if economic conditions warranted, the Committee could decide to slow the pace of purchases at one of its next few meetings." In contrast, participants?including non-voting regional Presidents?generally felt that trimming the rate of purchases would likely be appropriate "in coming months." However, ever the more hawkish language describing participants' views represents a change from the September minutes, in which "most" thought that it would be appropriate to begin reducing the pace of asset purchases by the end of the year. Also suggesting a lack of appetite for near-term tapering, "a number of participants noted that recent movements in interest rates … suggested that financial markets viewed … asset purchases and forward guidance ... as closely linked." However, December remains on the table as a possibility, in particular given stronger incoming data since the October meeting.

2. Participants seemed unenthusiastic about adopting a mechanical rule tying the pace of purchases to a single variable such as the unemployment rate. Some suggested announcing a total size of remaining purchases or a timetable for winding down the program as an alternative. Regarding the composition of tapering, "a number believed that making roughly equal adjustments to Treasury and MBS purchases would be appropriate," suggesting a stronger preference for equal tapering of Treasuries and MBS than that expressed in prior minutes.

3. On potential future enhancements to the forward guidance, "a couple" participants noted the merits of simply reducing the current 6-1/2% unemployment rate threshold, although others noted concerns about such a change. Others brought up the possibility of an inflation floor, although the benefits of such a change were viewed as "uncertain and likely to be rather modest." Several participants concluded that providing more qualitative information regarding the Committee's intentions after the threshold was reached could be most helpful. Overall, we see this discussion as representing a lack of consensus at the time of the October meeting on how the forward guidance should be adjusted in the future.

4. The minutes also noted that "most participants" thought that a reduction in the interest rate paid on excess reserves was "worth considering at some point" although the benefits of such a step were "generally seen as likely to be small except possibly as a signal of policy intentions."

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 11/20/2013 - 16:46 | 4174940 Charles Nelson ...
Charles Nelson Reilly's picture

pffftttt... what a fucking shit show!

Wed, 11/20/2013 - 16:50 | 4174959 Say What Again
Say What Again's picture

Really -- Taper in December -- Really?

Did they have a little smiley at the end of the report?

Wed, 11/20/2013 - 16:54 | 4174975 john39
john39's picture

taper? only if they have decided that now is the time to pull the plug... and, if that is the case, it goes without saying that all fascist cronies get sufficient advance notice so that they can profit appropriately.   the miracle of central planning in all its glory.

Wed, 11/20/2013 - 17:13 | 4175033 nope-1004
nope-1004's picture

Taper won't happen, period.  But since the Fed is completely out of bullets, sending these types of statements through the press is all that is left.  Otherwise, we'd see this extensive toolbox at work that the Fed supposedly has, wouldn't we?

Fucking liars.


Wed, 11/20/2013 - 17:16 | 4175070 Bay of Pigs
Bay of Pigs's picture

Its been all of one day since Evans suggested $125B a month was coming for 2014.

FED and Bankster jawboning has gone Full Retard.

Wed, 11/20/2013 - 19:06 | 4175139 Cult_of_Reason
Cult_of_Reason's picture

If you like your QE, you can keep your QE. Period.


Corker Says Yellen Gave Him Commitment to Scale Back Bond Buying 


Thu, 11/21/2013 - 02:27 | 4176545 BringOnTheAsteroid
BringOnTheAsteroid's picture

I'm not sure it's remotely possible to say something less meaningless. "Relatively neutral" - what does that mean. "Taper possible in December" - what does that mean, anything different to "No taper is possible in December". Lots of things are possible in December, in fact an infinite number of things are "possible". My guess is to improve their bottom line Goldman have sacked all their analysts and just outsourced the work to astrologers, reads very much like my Zodiac.

Wed, 11/20/2013 - 16:48 | 4174949 NOTW777
NOTW777's picture

possible? ha - like its possible obama will resign

Wed, 11/20/2013 - 16:51 | 4174965 savedeposit
savedeposit's picture

Maybe some sort of ducttaper to keep all shit together

Wed, 11/20/2013 - 16:55 | 4174984 FieldingMellish
FieldingMellish's picture

The possiblities are endless........... just like QE.

Wed, 11/20/2013 - 16:57 | 4174988 Say What Again
Say What Again's picture

Yes, I know.  I'm dusting off my text book on graph theory and decision trees now.

Wed, 11/20/2013 - 16:56 | 4174987 Conax
Conax's picture

Anything's 'possible'. I might get that date with Jessica Alba but I'm not holding my breath.

They 'talk' about a taper to cover up the monkey hammer on PMs.


Wed, 11/20/2013 - 17:03 | 4175020 john39
john39's picture

or, the monkey hammer on PM's is supposed to make 'taper' look like a real possibility. 

Wed, 11/20/2013 - 16:57 | 4174991 1835jackson
1835jackson's picture

Do the opposite of whatever GS says. I ain't no fucking muppet.

Wed, 11/20/2013 - 16:58 | 4174994 walküre
walküre's picture


Wed, 11/20/2013 - 16:59 | 4174995 walküre
walküre's picture

Double dare!

Wed, 11/20/2013 - 17:01 | 4175010 Black Forest
Black Forest's picture

"December is still possible."

December is inevitable every year because it's Christmas time.


Wed, 11/20/2013 - 17:03 | 4175019 pound the vix
pound the vix's picture, Anyday!

Wed, 11/20/2013 - 17:37 | 4175150 wiseindian
wiseindian's picture

I'm wondering if there's a website where you can place bets on the taper vs. no taper vs. untaper after taper....thingie.....each month. 

Wed, 11/20/2013 - 17:07 | 4175036 pound the vix
pound the vix's picture

We want to taper but everytime we mention taper the bond market tanks so we can't taper.  But interest rates are rising because the economy is getting better but if interest rates rise the economy will do worse so we can't taper.


But taper can't go on forever! but it needs too??


There that should clear things up?


PS - POMO does not cause the SPY to go up, but stopping it does cause it to go down so we cannot taper.

Wed, 11/20/2013 - 17:07 | 4175037 QE4EVER
QE4EVER's picture

"given strong incoming data since the October meeting"

Yeah, everything's great. You have 2 numbers out of 10 that are decent and we have stronger data.

These folks must be on the crack pipe with the mayor of toronto!



Wed, 11/20/2013 - 17:15 | 4175068 Urban Redneck
Urban Redneck's picture

They already have "a mechanical rule tying the pace of purchases" to variables. However, it's TWO variables, not ONE - the S&P 500 and the Russell 2000.

Wed, 11/20/2013 - 17:30 | 4175127 Ned Zeppelin
Ned Zeppelin's picture

The Fed's three powers:

1. fed rates

2. QE and panoply of ad-hoc "tools" (aka, money printing)

3. Jawboning

The third in magnificent, full display here, as there is no serious plan to taper - Wall Street would throw a hissy fit, and there is no way that could be allowed.  Some external event is what I am foresseing. . . .

Wed, 11/20/2013 - 17:35 | 4175144 wiseindian
wiseindian's picture

Taper , no taper, no wait - first taper then un-taper, no wait - I may have other bullets to fire  ......(click click)...

Ya know...there's a distinct clicking sound that a gun makes when you continue to pull the trigger after running out of bullets to fire.

Sadly, written words do not capture the clicking sounds every Fed cowboy heard at the meeting as they realized ...whoa son! We're clear outta bullets now....what here do we fire next to bring this country down?

Wed, 11/20/2013 - 17:42 | 4175167 blindman
blindman's picture

sure, anything is possible, right?
An artist recreated Blade Runner with 12,000 water color paintings

Wed, 11/20/2013 - 17:48 | 4175186 B.J. Worthy
B.J. Worthy's picture

Santa Claus is a slightly more realistic December expectation.

Wed, 11/20/2013 - 19:18 | 4175426 David Fry
David Fry's picture

Do these Fed governors get paid for all these speeches they seem to make now?

Wed, 11/20/2013 - 19:30 | 4175464 Kina
Kina's picture

If they taper even a hundred dollars people will know the party is over and they will to look elsewhere....people start toward the exits, cash in profits..a trickle quickly becomes a flood because who wants to be last out the door.

Can imagine things will begin to freeze up as it is assumed the future holds less and less easy money.


And interest rates...??





Wed, 11/20/2013 - 19:34 | 4175478 Big Ben
Big Ben's picture

I'll believe in taper when I see it. Until then, I regard it as Goldman agitprop to drive down the price of Treasuries so that they can buy them up now, and sell them to the Fed next year at a very nice markup.

Everything Yellen has said till now indicates that she takes the Fed's employment mandate much more seriously than the inflation mandate. Inflation (by the Fed's numbers) is running low, unemployment is high. Why would she taper now? I think she is much more likely to expand QE.

Is anyone aware of any statement where Yellen indicated that tapering might be coming?

Wed, 11/20/2013 - 19:58 | 4175600 stant
stant's picture

no taper until the bond vigilantes show up and call bullshit, its coming just not now

Wed, 11/20/2013 - 20:57 | 4175806 blindman
blindman's picture

fiat depreciation as in Wiemar or Zimbabwe need a shelter
currency to base their attack from, bond vigilante base,
if you will. the global currency manifest presents a
confounding problem for the would be bond vigilantes.
this is the problem, imho,
scratch head here.

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