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The Most Important Line In Today's FOMC Minutes

Tyler Durden's picture





 

Perhaps the most important line in today's FOMC minutes:

... Several participants suggested that risks to financial stability should appear more explicitly in the list of factors that would guide decisions about the federal funds rate once the unemployment rate threshold is crossed...

What this means is that since the Fed's legacy forward guidance of a 6.5% unemployment threshold is dead and buried (and will become a non-factor as soon as next month when unemployment could fall well below this red line), what the Fed is now suggesting is that the Fed will "qualitatively" guide to more intangible factors: like "risks to financial stability" better known as the prevailing level of the S&P 500. In short, is the Fed about to admit that screw inflation and screw unemployment, it was all about the S&P 500 and making the rich richer all along?

Also, one wonders just what form this guidance will take? A 25 bps rate hike for every 100 upside points in the S&P 500? Or 50 bps if a semi-insolvent Caa/CCC company can issue covenant-lite fourth lien debt at Libor + 1% to widows and orphans from the Ukraine? Alternatively, will the Fed guarantee that the second the S&P enters a correction then it will proceed to resume $85 billion of monthly QE. What about a 1000 point correction - will the Fed simply buy every share of AMZN then?

 


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Wed, 02/19/2014 - 15:25 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

The most important line should be: "Buy gold."

Wed, 02/19/2014 - 16:29 | Link to Comment TruthInSunshine
TruthInSunshine's picture

The takeaway SHOULD BE that the taper is ON and they will wind down LSAP, but that they're jawboning big time on when consensus for raising interest rates will be since their prior 6.5% threshold (reached due to falling LFP rate, and not true employment/hiring trend) has trapped them - but this is a moot point from the Fed-supporting-or-not-equity markets (see below).

The fact that even the uber-doves are now clearly not trying to "talk away" from the taper is HUGELY NEGATIVE for equity & all risk asset prices as it's always been The FLOW and NOT STOCK of Easy Fed Funds in fungibility of purchasing assets from PDs that has mattered.

What they do or don't do with FOMC rate is a non-issue at this point. ZIRP HAS always been priced in.

It's always been about LSAP Flow, and that is now pronounced dying and soon to be dead. The biggest dove in the world just spouted off about just this in speaking to how robustly the economy is picking up steam (which he knows is a lie - that tells anyone all they need to know about how badly they need to manage their out of control balance sheet).

THESE ARE THE MOST HAWKISH FOMC MINUTES IN YEARS. For those who disagree, please explain how robustly-bullish-on-the-economy uber-doves going on the record with any claim to the contrary.

Fed is trapped like a rat.

Wed, 02/19/2014 - 16:31 | Link to Comment kliguy38
kliguy38's picture

I still have a $100 dollar bet I made last September with two GS boyz that after they taper twice that they would raise QE to 150B/mo by May.......I still think I will win........

Wed, 02/19/2014 - 16:41 | Link to Comment TruthInSunshine
TruthInSunshine's picture

QE is being suffocated & being buried in real time.

There's no other explanation for the on-the-record lies by the most dovish FOMC members about how robust the economy is, while trying to distract everyone away from the now firmly entrenched wind down of the LSAP to matters of when interest rates should be raised, presumably dependent on a now floating U3 target of something that may be less than 6.5%.

Look at what they're doing - continuing to taper while distracting with talk of interest rates, and lying about the real state of GDP growth to justify the (now necessary) taper.

Yellen will have to clean up Bernanke's balance sheet whether she likes it or not, and even the most dovish of her colleagues are lending her their support now.

Wed, 02/19/2014 - 19:31 | Link to Comment Jack Napier
Jack Napier's picture

I wouldn't say these are the most hawkish minutes in years, rather the least dovish. A square is a square even if it's got rounded edges, unless you're asking Goebbels that is. Tapering is still an overall increase in QE. When they end QE, raise interest rates, or start destroying dollars/treasuries then I'd put up the hawk flag.

Wed, 02/19/2014 - 16:33 | Link to Comment Frank -THE COIN -
Frank -THE COIN -'s picture

When they raised the Fed Funds rate  .25 in 1998-2000 & 2004-2006, very bad things happened after that. In those Tame Times it was a Recession.

Wed, 02/19/2014 - 16:48 | Link to Comment TruthInSunshine
TruthInSunshine's picture

They're tightening now, and will continue to do so, through tapering.

Interest rates, based on the new abnormal, are ALMOST inconsequential in the new "markets" left in Bernanke's wake.

Wed, 02/19/2014 - 15:26 | Link to Comment fonzannoon
fonzannoon's picture

If The fed controls the S&P why would they allow it into correction territory? That seems silly.

Wed, 02/19/2014 - 15:29 | Link to Comment SilverIsKing
SilverIsKing's picture

Sarcasm?

Wed, 02/19/2014 - 15:35 | Link to Comment fonzannoon
fonzannoon's picture

No, not at all. 

" it was all about the S&P 500 and making the rich richer all along?"

This is basically correct. So expect the S&P to basically be on autopilot from here with the occasional January dips that get the shit bought out of them.

As said on todays treasury post (which I disagree about stock/flow but that is not important) by my fellow status quo propogating, msm disinfo shill zh'er...

"The Fed is using proxy Central Banks, and together they probably have reached the 51% threshold. It's game over at that point. ZIRP forever. Credit Default Swaps are meaningless because TPTB just ignore the laws, or write new ones, just like they did in Greece and Cyprus. They have engineered the system to avoid the next Lehman event. We have a centrally planned economy now... planned by the Central Banks of the world. It's all about monetizing the debt with no risk because once you control the bond market, AND the printing press, you have perpetuated the ponzi. Debt is their god, and the world is going to be their serfs in their New Feudal World Order. Controling governments by controling their debt and thereby dictating how the govt security systems will be used to enforce the entire scheme. The countries that don't play along, will get wacked. It's the mafia way. Learn to think like a sociopath banker, and you understand exactly what they are trying to do. "

Wed, 02/19/2014 - 15:41 | Link to Comment jbvtme
jbvtme's picture

this conclusion is heart breaking

Wed, 02/19/2014 - 15:52 | Link to Comment Pure Evil
Pure Evil's picture

Its all about shearing the sheep.

As we all know the sheep buy at the all time f***ing high and then sell at the bottom.

So, in effect its a double shearing. Once to get the fleece, the second time to get the pound of flesh.

Wed, 02/19/2014 - 15:52 | Link to Comment SilverIsKing
SilverIsKing's picture

I asked about 'sarcasm' because even if you are correct, we know the reason for them to bring the S&P 500 into correction territory is to shake out longs and draw in shorts to take more of everyone's money before they continue the pump.

Wed, 02/19/2014 - 16:00 | Link to Comment fonzannoon
fonzannoon's picture

yeah sure, makes sense.

Wed, 02/19/2014 - 20:30 | Link to Comment garypaul
garypaul's picture

fonzanoon and silverisking, the way I understood the line mentioned in the article is:

"if you want us to untaper, then stop buying the market and let SP go down. If you keep buying on anticipation of untaper, then we can never untaper because SP is too high"

 

Wed, 02/19/2014 - 15:42 | Link to Comment sodbuster
Wed, 02/19/2014 - 15:50 | Link to Comment Headbanger
Headbanger's picture

The phrase "risks to financial stability" don't mean the stupid fucking stock market  but the stability of the Federal Reserve itself you mooks!

They're saying, look the fuck out cause we're looking the fuck out for us now!

Wed, 02/19/2014 - 16:18 | Link to Comment derek_vineyard
derek_vineyard's picture

the fed's mandate is to keep the wealth effect intact and the wealthy backstopped....if that requires a shakeout, so be it

 

if you aren't in the club, you are a modern day slave

 

 

Wed, 02/19/2014 - 16:41 | Link to Comment Cursive
Cursive's picture

@fonz

Everything is subject to a "correction" and I think we are due for a TPTB correction.  Sure, there's a powerful cabal of globalists who would like nothing more than to control everything and, while they may be very successful in the short run, all of the best laid plans eventually unravel.  We are at the point of unraveling.  You can only bet a dog for so long before he turns on you and you can only repress the masses for so long before they revolt.

Wed, 02/19/2014 - 16:46 | Link to Comment fonzannoon
fonzannoon's picture

who is going to revolt?

I think everyone has this one backwards. Take away the fed (wealth effect etc.) and you will have tanks on the street tomorrow. While that may please a lot of people on here, this place represents the minority, the very small minority. 

Wed, 02/19/2014 - 17:11 | Link to Comment Cursive
Cursive's picture

@fonz

"Revolt" is probably the wrong word.  It implies an organized overthrow effort.  That probably is not the future, but idling watching cable TV is not in our future either.  Declining standards of living will inevitably lead to major social and political upheaval.

Wed, 02/19/2014 - 17:24 | Link to Comment fonzannoon
fonzannoon's picture

i don't doubt that. i just don't know that markets have to crash as a byproduct of it.

Wed, 02/19/2014 - 23:47 | Link to Comment Tinky
Tinky's picture

Yes they do, and they will. The reason is that the Fed, even with the help of its extended 'family' around the world, is not going able to protect the U.S. markets from the foreign markets with which they are so deeply entwined.

Yes, they've been able to do so in spite of Greece and Cyprus, but those countries are, as you know, still in deep water, and now there are numerous others that are beginning to crack as well.

The worldwide markets and Western banking system are too intertwined and unstable for TPTB to be able to prevent a crash.

It's not if but when.

P.S. – You're an excellent foil; keep up the good, thought-provoking work!

Wed, 02/19/2014 - 18:33 | Link to Comment Crooks
Crooks's picture

Because they profit from the bubble and profit even more from the bust and rebound since they are the ones directing them. It can never go into a bubble without never falling back down, Fool.

Wed, 02/19/2014 - 15:30 | Link to Comment Sudden Debt
Sudden Debt's picture

just bought 20 puts on Tesla.

LET IT BURN!! Numbers after hours

52wk Range: 33.80 - 206.00
Volume: 8,099,994
Avg Vol (3m): 9,349,780
Market Cap: 23.98B
P/E (ttm): N/A
EPS (ttm): -1.26
Div & Yield: N/A (N/A)

that company is crazy overpriced!!

Wed, 02/19/2014 - 15:40 | Link to Comment Winston Churchill
Winston Churchill's picture

Dangerous.
On the fundamentals it should be trading at $0 ,and
be in bankruptcy.

Wed, 02/19/2014 - 15:54 | Link to Comment SilverIsKing
SilverIsKing's picture

Fundawhatels? Don't know what you mean.

Wed, 02/19/2014 - 21:30 | Link to Comment Fidel Sarcastro
Fidel Sarcastro's picture

I think he meant funnymentals.

Wed, 02/19/2014 - 16:12 | Link to Comment Sudden Debt
Sudden Debt's picture

And Tesla is being 1/8 of TM price which is absurd.

Wed, 02/19/2014 - 15:45 | Link to Comment Groundhog Day
Groundhog Day's picture

Good Luck SD,

I am not that brave, been burned on Tsla b4.  With the FED Put, and record sales of Mercedes benz, BMW, Masarti, and now Ferrari, it is a dangerous proposition for me

Wed, 02/19/2014 - 16:04 | Link to Comment Sudden Debt
Sudden Debt's picture

well, I went to the car shows to try out a tesla and got a offer.
Waiting times where cut in half meaning overstock

and tesla only produces 50k cars max this year. got that from the vice himself so why not he?

been burned also but now it's just to high.

Wed, 02/19/2014 - 15:47 | Link to Comment pragmatic hobo
pragmatic hobo's picture

things that will kill is if tsla stocks do not move and you end up with volatility crush ...

Wed, 02/19/2014 - 15:54 | Link to Comment ebworthen
ebworthen's picture

What?

You didn't hear the rumor about Apple buying Tesla?

Elon Musk met with the Apple acquisition team a couple months ago.

You know, an iCar? (though if the insanity continues it will be an iCahnCar and come in brushed stainless steel). 

Biff sends his regards, the casino is rockin'.

Wed, 02/19/2014 - 16:06 | Link to Comment Sudden Debt
Sudden Debt's picture

that's just a rumor based on him being seen at the apple HQ.

But nobody seems to realize that tesla has a ipad interface (which sucks bigtime) and that that could have been the reason for the meeting.

Wed, 02/19/2014 - 16:17 | Link to Comment ebworthen
ebworthen's picture

I know, I was just ribbing you.

I wouldn't play in Tesla's sandbox, you might get sand in your eye or find a cat turd (it's a giant litterbox after all).  TruthInSunshine's comment below is what I was getting at. 

Best of luck.

Wed, 02/19/2014 - 16:07 | Link to Comment TruthInSunshine
TruthInSunshine's picture

The fact that Apple is openly & brazenly talking about becoming both a "car company" and "motion picture company" should scare the living shit out of their investors.

This a) telegraphs how badly they've hit the new idea wall since Steve Jobs departed, b) demonstrates that they're under constant pressure to fend off circling vultures like Icahn, who smells blood & weakness in management, and c) proves that they really are nothing more than just another run of the mill commodity seller, at this point.

Wed, 02/19/2014 - 17:22 | Link to Comment floyd084
floyd084's picture

^Poor guy

Wed, 02/19/2014 - 18:34 | Link to Comment Crooks
Crooks's picture

Ahahahahahahah, you just lost it all, they reported crazy profit numbers and its up 12% after hours. 

Thu, 02/20/2014 - 01:56 | Link to Comment Colonel Klink
Colonel Klink's picture

OUCH!

Wed, 02/19/2014 - 15:33 | Link to Comment Caracalla
Caracalla's picture

FOMC is background noise.  Even with no un-taper, stocks are off the lows....just BTFD

Wed, 02/19/2014 - 15:47 | Link to Comment NDXTrader
NDXTrader's picture

The minutes are really revealing that these clowns have absolutely no idea what they are doing. There are no benchmarks, no goals, no idea why to taper or un-taper. People around here give them way too much credit - they have lost control several times in the last 15 years. These minutes make them look like monkeys throwing shit at the wall

Wed, 02/19/2014 - 17:48 | Link to Comment Wait What
Wait What's picture

what part of 'unprecedented, unconventional monetary policy' obscures the fact that they've been shooting from the hip for the past 5 years?

we will cross the consequences bridge when we come to it

the only credit they get around here is for their ability to hit CTRL+P, which is the only way they've been able to paper over a real collapse for a while. looks like it won't be long before they have to find some different kind of shit to throw.

Wed, 02/19/2014 - 15:49 | Link to Comment ebworthen
ebworthen's picture

" In short, is the Fed about to admit that screw inflation and screw unemployment, it was all about the S&P 500 and making the rich richer all along?"

Thanks Tyler.

Being unemployed and increasingly poorer it makes me furious that the FED still throws $75 Billlion from the public treasury to the Wall Street pigs every month. 

That money is preventing people like me from being hired.

That largesse, that immoral propping of the elites, is preventing them from experiencing any pain or consequence.

Disgusting.

Wed, 02/19/2014 - 16:00 | Link to Comment dead hobo
dead hobo's picture

Sorry, but I disagree with your conclusion. I think it means just the oppposite in that they must explicitely justify WHY they want to keep rates low when the unemployment target is reached. Might be hawkish. Might be namby. Definitely interesting.

Wed, 02/19/2014 - 16:01 | Link to Comment youngman
youngman's picture

You can bet the Central banks will print as much as they need until they cant give it away anymore....when its a 1000% a minute inflation.....but they will print until they die....as they will try to save the system that they live on....when it fails they are out of a job....

Wed, 02/19/2014 - 16:18 | Link to Comment Spungo
Spungo's picture

Tail risk: while printing money, the economy might accidentally improve somehow

Wed, 02/19/2014 - 16:42 | Link to Comment Winston Churchill
Winston Churchill's picture

The Chinese one ?

Wed, 02/19/2014 - 17:14 | Link to Comment Seeking Beta
Seeking Beta's picture

Lol - Love the Sarc!

Wed, 02/19/2014 - 17:35 | Link to Comment Wait What
Wait What's picture

who is so naive as to think their ostensible reasons for QE haven't been lies all along? if they're on ZH, probably no one. there's a reason its called QEternity. they will do 'whatever it takes' to keep the 'everything is getting better' lie going as long as reality doesn't agree. they will NEVER allow the markets to correct in a manner similar to 2008. that you can bet your life savings on.

Wed, 02/19/2014 - 20:26 | Link to Comment catch edge ghost
catch edge ghost's picture

private insurors to let some air out of the bubble as they sell to pay claims for windmageddon '14. prolly.

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