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Hilsenrath Unveils 712 "Tapering Is Not Tightening" Words Of Wisdom In 3 Minutes

Tyler Durden's picture





 

The "swap" of $10 billion of asset purchases for a lower employment threshold and lower-rates-for-longer forward guidance knne-jerked stocks dramatically higher (for now). But while that was occurring, the Wall Street Journal's Hon Hilsenrath was busy preparing 712 words in a record-setting 3-minutes to explain how the Fed remains data-dependent... and will remain dovish for longer than previously thought.

 

Via WSJ,

The Federal Reserve said it would reduce its signature bond-buying program to $75 billion per month, taking a step away from a policy meant to recharge economic growth, and said that it will continue in "further measured steps at future meetings" if the economy stays on course.

After months of intense discussion at the Fed and in financial markets, the Fed's policy-making committee announced Wednesday it would trim its purchases of long-term Treasury bonds to $40 billion per month, a reduction of $5 billion, and cut its purchases of mortgage-backed securities to $35 billion per month, a reduction of $5 billion.

"In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases," the Fed said in its formal policy statement.

The Fed also sought to enhance its commitment to keep short-term interest rates low for a long time after the bond-buying program ends. Fed officials inserted new language in the policy statement that stressed they will be in no rush to raise rates once unemployment reaches the 6.5% threshold the central bank has set out as the point at which they would start considering raising rates, as long as inflation remains in check.

The Fed said that "it likely will be appropriate to maintain the current target range for the federal funds rate well past the time" that the jobless rate dips below the 6.5% threshold, "especially if projected inflation continues to run below the Committee's 2 percent longer-run goal."

Short-term rates have been pinned near zero since late 2008. Most Fed officials expect to keep interest rates low well into the future. In their latest economic projections, also out Wednesday, 12 of 17 Fed officials said they expected the central bank's benchmark interest rate, which is called the fed funds rate, to be at or below 1% by the end of 2015. Ten of 17 officials expected the rate to be at or below 2% by the end of 2016.

The Fed acknowledged concerns that inflation continues to run stubbornly below the central bank's 2% target, saying that it is "monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term." The Fed's preferred inflation gauge, the price index for personal consumption expenditures, increased just 0.7% in October from a year prior, according to a Commerce Department data release earlier this month.

Officials by and large stuck with their economic forecasts for 2014, making only slight adjustments to projections of growth, unemployment and inflation that they made in September. In the statement, officials said that risks to the economy and jobs market have become "more nearly balanced."

Read more here...

 

 


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Wed, 12/18/2013 - 15:20 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

This fuckin guy = amazing

Wed, 12/18/2013 - 15:22 | Link to Comment flacon
flacon's picture

Less QE means the economy is doing better = stocks rise. 

More QE means more money for stocks = stocks rise. 

Wed, 12/18/2013 - 15:27 | Link to Comment Headbanger
Headbanger's picture

Oh please..  Hilsenrath had perhaps a half dozen different blurbs written weeks ago for each tapering decision he think of.

So he just filled in the taper amount and prints out the appropriate explanation and this is it.

Wed, 12/18/2013 - 15:30 | Link to Comment 101 years and c...
101 years and counting's picture

i seriously doubt h-rat writes this shit.  he just adds his name to the piece he receives from the same douchebags that pull Ben's strings.

Wed, 12/18/2013 - 15:25 | Link to Comment nope-1004
nope-1004's picture

Taper message by the FED is that we do in fact have inflation.  No need to print more money (supposedly), so Ben is actually acknowledging inflation.  Rates will rise.

Wed, 12/18/2013 - 16:24 | Link to Comment max2205
max2205's picture

Get on board the dow 20k train

Wed, 12/18/2013 - 15:30 | Link to Comment tarsubil
tarsubil's picture

In fantasy land, the no eyed man is king.

Wed, 12/18/2013 - 15:19 | Link to Comment Racer
Racer's picture

So tell me how he is not prosecuted for reading information prior to announcement?

Wed, 12/18/2013 - 15:32 | Link to Comment NoDebt
NoDebt's picture

Because he is one of the press memebers who is given the information 30 minutes in advance in the Fed's "lock-down room."  During this time they read the minutes and write their article.  No communication allowed outside the room (allegedly) until after the official release of the Fed minutes.  Then they send the article to their editor/publisher and out it goes into the world.

It's not a mystery.  It's been going on for years and years.  I'm not sure why we keep getting so worked up over this.

Wed, 12/18/2013 - 15:29 | Link to Comment spastic_colon
spastic_colon's picture

not defending this fed sycophant, but the embargo rules allow for certain media to receive the report 20 minutes early.  You can email hilsenrath and he will explain.

Wed, 12/18/2013 - 15:21 | Link to Comment Charles Nelson ...
Charles Nelson Reilly's picture

does Hilsenrath have his piece ready for when QE increases to $125 billion a month?

Wed, 12/18/2013 - 15:25 | Link to Comment 101 years and c...
101 years and counting's picture

yes.  he even has it dated.

Wed, 12/18/2013 - 15:21 | Link to Comment flacon
flacon's picture

That's just criminal. I wonder who he told about the Taper before the announcement. 

Wed, 12/18/2013 - 15:35 | Link to Comment NoDebt
NoDebt's picture

Don't know. You should ask the people who were selling bonds since the open this morning.  Go look at a daily chart of the 10 year.  Nice, straight "up and to the right" kinda line on the yield.  It's still tracing that line right now, albeit at an accelerated pace.

Wed, 12/18/2013 - 15:37 | Link to Comment Critical Path
Critical Path's picture

Let me fix your statement to reflect the current cronyism psuedo-legal cluster paradigm:

 

"Thats just criminal I wonder who he told about the Taper before the announcement."

 

There.

Wed, 12/18/2013 - 15:22 | Link to Comment Cursive
Cursive's picture

The more important question is why is a 2% inflation rate acceptable policy?

Wed, 12/18/2013 - 15:30 | Link to Comment Yikes
Yikes's picture

Furthermore, they're concerned the current rate is only .7%.   Nothing better then the FED trying to stoke inflation.

Wed, 12/18/2013 - 15:36 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

This is the loss of purchasing power each decade that a single lump sum stashed in a savings account at any given point, assuming 2% YoY inflation.

1st decade: 22%

2nd decade: 58%

3rd decade: 118%

4th decade: 222%

This ensures that young men suddenly rich with cash will not be able to pass on the purchasing power to the next generation - nor live out his old years affording the same lush life as in youth - without taking on and overcoming risk.  That is why 2% is acceptable.  It is the initial slope of the parabolic sand pit that leads to the mouth of the Almighty Saarlac.

And if you think that your rich Uncle Fagan who left you with the tin cans of greenbacks will come to your rescue, well his gains are even further up the parabola:

5th decade: 416%

6th decade: 816%

This essentially ensures that wealth will pass a gauntlet of risk lasting 3 generations.

Wed, 12/18/2013 - 15:59 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

+1 for the reminder to think long term.

Wed, 12/18/2013 - 16:31 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Nuggets like this are the reason to read the comments section here on this site.  This is the only site where said section isn't completely worthless.  

Wed, 12/18/2013 - 16:48 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Me so happy.  Somebody check my math, I've had three rough nights in a row.  Really, I should have written it differently, those values are a sort of backwards representation, but "800%" is so dramatic I couldn't resist.  That means, for instance, that you have to have 3x more cash now than you did 40 years ago to match the initial purchasing power.

Wed, 12/18/2013 - 15:27 | Link to Comment fonzannoon
fonzannoon's picture

this is pretty funny. the fed will supposedly buy less bawnds because the economy is getting better....causing moar and moar people to sell bawnds...which will be bought by.......? and meanwhile they will keep rates low by the only mechanism available to them which is buying bawnds....

and yet somehow they will buy less bawnds....

Wed, 12/18/2013 - 15:29 | Link to Comment Cursive
Cursive's picture

@fonz

bought by....the BOJ if twitter is to be believed....

Wed, 12/18/2013 - 15:33 | Link to Comment fonzannoon
fonzannoon's picture

The BOJ has to by their own shit. It's every CB for themselves now.

Wed, 12/18/2013 - 15:37 | Link to Comment NoDebt
NoDebt's picture

Maybe they could buy eachother's bonds and call it "trade."

Wed, 12/18/2013 - 15:39 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Maybe they will buy fewer bonds, but the bonds will be bigger, perhaps printed on oaktag or manilla to sustain the volume of ink.

Wed, 12/18/2013 - 16:45 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

At the risk of repeating myself, the 10 year above 3% is a big fucking problem for a couple of big banks in Europe; March quarterly expiration just got real interesting.  Lots of backdoor Fed liquidity / theft of the value of our productive labor incoming soon. 

Wed, 12/18/2013 - 15:22 | Link to Comment ebworthen
ebworthen's picture

He didn't have inside information and he's not a mouthpiece - he's just an HFT typist.

Wed, 12/18/2013 - 15:23 | Link to Comment LetThemEatRand
LetThemEatRand's picture

New Michael Snyder blog entry title in the works!

712

 

Wed, 12/18/2013 - 15:24 | Link to Comment sixsigma cygnus...
sixsigma cygnusatratus's picture

Yes, this taper will last about as long as the poor black guy on the deck of the Starship Enterprise.

Wed, 12/18/2013 - 15:23 | Link to Comment ebworthen
ebworthen's picture

No, no; the guy in the red shirt named "Kowalski".

Wed, 12/18/2013 - 15:23 | Link to Comment Al Huxley
Al Huxley's picture

Well, the market loves it, and that's all that matters. Taper, no taper, its all good.  Even the skanky gold stocks are holding their own, and Facebook looks like it will probably run to 100 by end of the year.

Wed, 12/18/2013 - 15:23 | Link to Comment azengrcat
azengrcat's picture

The Fed is easy like Sunday morning. 

Wed, 12/18/2013 - 15:26 | Link to Comment chaartist
chaartist's picture

The Fed acknowledged concerns that inflation continues to run stubbornly below the central bank's 2% target,

 

is this bull still needed? yes we love to lose purchasing power. stubborn inflation

Wed, 12/18/2013 - 15:29 | Link to Comment Racer
Racer's picture

237 words a minute (very nearly the world record!) .... and that is without any time to actually read the announcement

Wed, 12/18/2013 - 15:26 | Link to Comment hidingfromhelis
hidingfromhelis's picture

More simply put, lessening the loosening isn't the same thing as tightening.  Regardless, QE in some form or another can't be stopped without crashing the "economy."  $85 billion to $75 billion per month is a symbolic gesture that will be compensated for in other ways; I'm sure.  Does anyone else anticipate some other programs to funnel money to TBTF's?

Wed, 12/18/2013 - 15:28 | Link to Comment Catullus
Catullus's picture

I suppose flow doesn't matter. I mean, they said so. It's not tightening. We can move on now to deciding which #N/A!-multiple stock to buy.

Wed, 12/18/2013 - 15:30 | Link to Comment ChaosEquilibrium
ChaosEquilibrium's picture

FED 'tightening' on a collapsing economy.....DOW UP ~160?

 

Makes perfect sense when markets are BROKEN!

 

This WILL LEAD TO OBLIVION!!!

Wed, 12/18/2013 - 15:41 | Link to Comment Archetype
Archetype's picture

"Tapering Is Not Tightening"

 

WRONG!

Thats exactly what it is in a super manipulated, centrally planned economy. You don't just cut down on your herione addiction from one day to another.

Wed, 12/18/2013 - 15:45 | Link to Comment JP McManus
JP McManus's picture

They're still reinvesting repaid principal.  So the overall level of heroine is still increasing.

Wed, 12/18/2013 - 16:11 | Link to Comment Archetype
Archetype's picture

Using old needles usually ends in disaster.

Wed, 12/18/2013 - 16:25 | Link to Comment Colonel Klink
Colonel Klink's picture

Hilsenrath needs to swing from a lamp post just like every Central banker.

Wed, 12/18/2013 - 16:46 | Link to Comment sbenard
sbenard's picture

More propaganda from Bernanke's whore!

Thu, 12/19/2013 - 08:29 | Link to Comment boatman
boatman's picture

like fractional reserve banking, fiat currency and the industrious supporting the lazy, inflation is a leg of the borrow from tomorrow for today 'table'.

this whole train goes til it blows........and that will be the next shock to the system, probly a big arab-isreali shooting war.

$200 oil takes it down and all those 700TRIL$ derivatives with it.

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