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Quote Of The Day: The 7% Target, Er, Threshold
As equities celebrate today's better than expected jobs report (for now), apparently comfortable in the knowledge that it's good-enough-but-not-too-good, we are reminded that just six short months ago, none other than the Fed chairman himself uttered these crucial words during his June 19th press conference:
"...when asset purchases ultimately come to an end the unemployment rate would likely be in the vicinity of 7%"
So here we are at 7.0%... and no taper in sight as excuse after excuse is rolled out for keeping the floodgates open. Whocouldanode? This appears to right up there with "subprime is contained", "nobody really understands gold", and "tapering is not tightening." But still we are supposed to give great credibility to their forward guidance?

The jobless rate for May, the latest data Mr. Bernanke had when he laid out that guidepost, stood at 7.6%. Then it fell much more quickly than Fed officials expected, dropping to 7.4% in July and 7.3% in August.
In September, the Fed surprised many market participants and held the quantitative-easing program steady. At his press conference after that meeting, Mr. Bernanke made no mention of the 7% guidepost he’d set out a mere three months earlier. When asked about it, he downplayed the importance.
“There is not any magic number that we are shooting for,” he said. “We’re looking for overall improvement in the labor market.”
No Fed official has publicly uttered the words “mistake” when it comes to the 7% figure, which according to Mr. Bernanke had broad support among members of the Fed’s policy committee. But the about-face seemed to acknowledge the misstep all the same.
As we have noted numerous times before; the "taper" is all about economic cover for a forced move the Fed has to make because:
1. Deficits are shrinking and the Fed has less and less room for its buying
2. Under the surface, various non-mainstream technicalities are breaking in the markets due to the size of the Fed's position (repo markets, bond specialness, and fail-to-delivers among them).
3. Sentiment is critical; if the public starts to believe (as Kyle Bass warned) that the central bank is monetizing the government's debt (which it clearly is), then the game accelerates away from them very quickly - and we suspect they fear we are close to that tipping point
4. The rest of the world is not happy. As Canada just noted, the US monetary policy will be discussed at the G-20
Simply put, they are cornered and need to Taper; but know the 'bad' effect it will have... and given Bernanke's history os forecasting, how van anyone "trust" forward guidance?
What is needed is another central bank to step up and keep the party going...
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Simple: The FED chooses not to trust the unemployment numbers too. keep printing. Forward.
no. the fed simply knows without money printing, the US defaults.
They will taper when the budget deficit comes down and the US isn't selling so many Treasuries.
The Fed is just there to mop up all the extra Treasuries (and maybe a few more too).
Listening carefully to the Bernak and yet to be redacted (How does one redact wishie washie non-hard statements? Oh, just as Red Line Barry...never-mind) he said clearly (wishy washy clearly) that the U number cannot be trusted because it is manipulated.
Just like stocks, gold, silver, interest rates, employment, trade, welfare rolls and Voting. Yes, just like Voting.
Keep you eyes here, kids, I'll letcha know when the coast is clear to stop QE... I didn't say a damned thing about what it's called...
And if they do cut back it ain't gonna be because of the economy growing.
It's gonna be because the Fed owns all the Treasuries in the Whole World Otherwise Needed For Collateral at the Pawn Shoppe to keep the Enterprise of Wealth, Freedom and Democracy Alive and Well. Well, maybe not so Well, but Alive
It's Alive!
Look, a Pony!
Agree. And what's with all these scared cheerleaders here lately?
I think they're a bunch of Wall Steeters who know their jobs are gone he second QE is tapered or they're Government types.
Oh, you noticed that, too, huh?
They're out in droves reinforcing the status quo...
Or cheer-leading for Bitcoin...
Which tell us that there's something up, amiss, don't look now but....
..... Hey look! A pony!
https://www.youtube.com/watch?v=yuBnBIB_ybs
I always translated it as:
"We're going to continue to lend money to idiots who will continue to bid prices way too high and beyond what anything is worth. We are going to continue repossessing their stuff when they go bankrupt and hold it off market so we can lend more money to idiots and push prices even higher for the stuff that we do eventually sell, thus inflating the value of everything on our books way above what it is worth. We will continue to lend money to a handful of banksters so the scheme can continue and they can pretend they are richer than what the economy can truly handle ... until sensible people manage to create real production and real jobs despite the fact that their competitors can be propped up indefinitely while they lose money."
Something like that, anyway.
or "We will continue to subsidize the idiots until the sensible people can compete with them ... after we further subsidize the idiots because we can't afford to let them pay for the consequences of their actions ..."
Central Planning is hard.
The talent lies in exactly how furiously you can punch the "print" button.
As I have said many times before, if your only tool is a Heidelberg, every problem is deflationary.
Blast from the past. These two go together.
https://www.youtube.com/watch?v=8pEiLHnjAiw
http://research.stlouisfed.org/fred2/series/MZM
Have a look at MZM NOWWWWW!!!!!
Hilarious if they said that 'we don't trust the governments figures anymore'
That's what the Bernak already said, FFS
That U is untrustworty (Not you, but U) because of the fudge factors of thems not looking for jobs anymore.
Root for the Breadlines!
EBT Deluxe
It's all good. If unemployment gets too close to 7% then they can always start using SGS figures!!!
ECB's turn!
Negative interest rates or some shit like that would be appropriate.
Ol' Yellen will shift the focus to wage growth, hours worked or some other metric.
Number of millimetrics per metric fuckton of metrics.
Seasonally adjusted, of course.
What is needed is another central bank to step up and keep the party going...
Maybe there's a central bank on the moon somewhere.
Do they even blush when they publish these ridiculous numbers?
It's not a (detectable) lie if you believe it's the truth.
<Thus the reason 'they' select ideologues as headmaster of the insane asylum.>
The Fed knows the numbers are cooked and untrustworthy. Moar smoke! Moar mirrors! Hilarity ensues.
Actually, not seasonally adjusted, the U-3 is now 6.6%.
Taper away, bitchez! I dare ya!
The Sun also has to be shining in the place where the BLS pulls it numbers.
Hisl-a-dick says Taper likely in December..but no reaction....fucking joke
Too much attention paid to this needless obfuscation.
Truth is oil was in the low 90s for a while and the economy goosed. Now it's headed back to 100 and that will dampen everything.
You can overthink this stuff.
The Fed knows the big international banks from New York/London/Paris/Frankfurt are insolvent and they dare not turn off the liquidity tap. It all goes back to Lehman. The failure of Lehman broke the daisy chain of OTC derivatives and IMO we are talking losses in the trillions that the Fed has had to take on its balance sheet. Quantitative Easing has nothing to do with Main Street, it is an on-going bailer pump for the big international OTC derivatives peddlers.
Agreed. And it appears that 2008 was the first part of the eye of the Hurricane. And while we are in this calm eye, Tyler is proving with all these HR 3293 , big bank bail- in - protective measures etc, that the Worst part of the Eye Wall is soon to make landfall.
The bearded clam is straight up financial terrist.
Arrest him, give him a fair trial, then peel the poisened littlw dwarf cunt to death, as well as the rest of the nation destroying cunts.
Dog, I hate these fuckers with a passion.
Yep, Heads I win, Tales I win.
I am omnipotent, I am the FED.
It's all starting to sound like Charlie Brown's teacher to me.
If we can time the Short positions enough to get a majority of the Avalanche that's coming, it will be one of the trading opportunities of a lifetime.
Thanks for ZH for bring this up, but does it really matter?
Earnings dont matter and accounting has been suspended.
That is the real question, isn't it- when is the Fed Funds rate lifted? Will it remain where it is for the next year, the next two years, the next three? Does anyone believe a single word put out by the FOMC in their "more transparent attempts at communication"?
Finally - they can stop all this QE madness and let the market determine the approprate rate on Treasury and Mortgage-backed securities.
seems like taper talk is just to introduce a little volatility for trading purposes
So Bernanke lied, who woulda thunk it?
So what if they come out at the next meeting and say they are cutting to $70bn a month?the market will take a dive from ludicrously overbought levels,and they will still be goosing the markets with $70bn of funny money a month,and the day for increasing rates will be pushed further and further into the future.
If the market drops too far,they will increase the monthly buy in until it goes back up.There is nothing complicated or unknowable about this,it is all too damn predictable.
They are waiting for the stock market to be so euphoric the even with a taper it goes up. Knowingly or not they're trying to unleash a massive stock market bubble.
Got to love a negative debt monetary policy.
QE is pure and simple Theft.
"Forward Guidance" is a euphemism for "Rearward Thrusting", practiced by the inbred Shtupper Class.
1330 ET: Get your 16K hats ready, only four or five points to go on the DOW.
We're there, we did it! Congrate BLS! Congrats HFT!
We've gone from
"Fuck U Bernanke!"
to:
"Fuck U!" -Bernanke
http://www.zerohedge.com/news/2013-12-06/real-us-unemployment-rate-115
The Taper is nonsense anyway, made for TV jargon. The 85 billion a month is nonsense too, the Fed "is" the Market... period.
The boogie man will show up eventually, it won't be Taper or whatever they do with the 85 Billion a month.
We are about to see what a joke the Fed is. Their word means absolutely nothing. We are about to see that when the Fed says data dependent they don't actually mean data dependent.
How on earth does 7.0% unemployment rate and a 3.6% GDP growth call for extraordinary monetary policy? Monkeys could do a better job of running a Federal Reserve Bank than Yellen and Bernanke.