Hilsencliff Notes: Q1 Worse Than Expected But Taper Stays

Tyler Durden's picture

In one of his most voracious tomes, The Wall Street Journal's Fed-see-er Jon Hilsenrath prepared 726 words and published them in 5 minutes to explain that the Fed's forecasts for Q1 were dismally wrong, that the future will all be rosy, and their forecasts spot on, and that the Taper is steady..."Fed officials acknowledged the first-quarter slowdown was worse than expected by saying activity "slowed sharply." Previously, they had just said activity merely slowed...Still, officials nodded to signs of a pickup in economic activity in March and April, suggesting they aren't too worried about the winter slowdown."


Via The Wall Street Journal,

The Federal Reserve said it would reduce its bond-buying program to $45 billion a month, while pointing to a growth pickup after a bad winter and sticking to previous guidance it has given on the outlook for short-term interest rates.

The steps were widely expected by investors before the meeting and represent a continuation of the monetary-policy strategy laid out by Fed Chairwoman Janet Yellen and former Chairman Ben Bernanke in the past few months.

The Fed's move came after a report earlier Wednesday that showed the U.S. economy barely grew in the first quarter. Fed officials acknowledged the first-quarter slowdown was worse than expected by saying activity "slowed sharply." Previously, they had just said activity merely slowed.

Still, officials nodded to signs of a pickup in economic activity in March and April, suggesting they aren't too worried about the winter slowdown.

"[G]rowth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions," the statement said.

The Fed said that household spending "appears to be rising more quickly." Recent reports on retail sales and auto sales have been stronger than expected.

But officials saw business fixed investment as having "edged down." Officials repeated their view from March that the "recovery in the housing sector remained slow."

With the move on its bond-buying program, the Fed will shave another $10 billion from its monthly purchases beginning in May. It was the fourth $10 billion reduction to the program since the beginning of the year. The cut will shrink the program to $25 billion in monthly Treasury bonds purchases and $20 billion in monthly mortgage-backed securities purchases.

Officials reiterated that they expect to keep scaling back the program in steady steps, provided the economy continues to evolve as they expect. The program is aimed at holding down long-term borrowing costs in hopes of boosting spending, hiring and growth.

All nine voting members of the policy-making committee supported the changes announced in the statement. Normally, the committee has 12 voting members, but the Fed board of governors currently has three vacancies.

It was the second time this year the Fed has voted unanimously for a policy move. That represents an unusually high degree of consensus for central-bank policy makers who have often been divided in the years since the financial crisis. Ms. Yellen has focused on maintaining consensus since taking over in February.

Presidents of regional Fed banks vote on a rotating basis. This year,Cleveland Fed President Sandra Pianalto, Dallas Fed President Richard Fisher, Philadelphia Fed President Charles Plosser and Minneapolis Fed President Narayana Kocherlakota are voters. Mr. Kocherlakota dissented at the last meeting, but supported the current move. The New York Fed has a permanent vote.

Little else changed in the three-page policy statement released by the Fed's policy-making committee. Officials held steady on the latest configuration of their interest-rate guidance, which they revamped at the Fed's March meeting.

Policy makers said they expect to keep short-term interest rates near zero "for a considerable time" after they stop buying bonds. Short-term rates have been effectively zero since December 2008.

Ms. Yellen suggested in a press conference in March that considerable time could mean six months, but there was no mention of such a time frame in the statement and Ms. Yellen strongly suggested in the same press conference that she didn't feel bound to that length of time.

In judging when to start raising rates, Fed officials will weigh a "wide range" of economic indicators, including labor market, inflation and financial sector measures, the Fed said in its statement.

Before the March changes, Fed officials had said they would keep interest rates frozen at least until the jobless rate falls to 6.5%, provided inflation remained in check. As the unemployment rate closed in on that level, officials felt the need to drop the numerical reference in favor of the less specific, broader guidance. Joblessness was 6.7% in March.

The Commerce Department reported earlier Wednesday that the economy hit a near-stall speed in the first quarter, growing at a rate of just 0.1%. Fed officials are predicting a pickup and saw signs of improvement in March and April.

A report by the Labor Department on Friday on the performance of the job market in April will provide the next big clue on whether their expectations will hold up.

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NotApplicable's picture

Damn you Tyler for running that picture!

viahj's picture

he must have breezed through his term papers in school.

Pool Shark's picture




"Economics:" The science of explaining tomorrow why the predictions you made yesterday didn't come true today. 



SAT 800's picture

https://www.youtube.com/watch?v=NJVlDEB_V2U  Try this on for size. Why they're not worried abut systemic failure; because the laws and regulations are being changed as we speak to make it the new normal to absorb whatever part of your bank deposits are necessary to make the banks whole.

NOTW777's picture

LOL "winter slowdown"  who ever thot there would be a winter

LetThemEatRand's picture

High Frequency Fed Minutes Analysis.

Confused's picture

It never fails to leave my stomach turning when I read how quickly this asshat is able to put out a response. It is so blatantly fucking obvious that he is tipped off. And the charade goes on. 

pitz's picture

Does anyone believe this turd can actually fly until the excesses of the FIRE and government sectors are liquidated?

FieldingMellish's picture

...because the Fed has such an enviable track record on GDP prediction...

machineh's picture

... and creating GROAF and YOBS!

SheepDog-One's picture

The Fed oracles bat about .000, hey I know, let's listen to them!

slaughterer's picture

What a weakling zero-bound economy.  Let's throw it in the trash bin and move on.   

what's that smell's picture

Jon Hilsenrath is a mechanical clown like that weird thing that turned tom hanks into a child in that funny movie...put in a quarter and learn the future.

beegle's picture

so i guess more buying out of brussels .... this is not a market its a whore house , with all my respect to whores 

Colonel Klink's picture

Hilsencunt!  I can only hope I see this guy swinging from a lamp post one day.

Incubus's picture

from the nuts, like that unfortunate squirrel in the image circling the 'net.

Zirpedge's picture

The long bad winter went directly to tornado season. Tornado's are bullish, go long mobile homes.

valley chick's picture

Last day in April...BUY! BUY! BUY!

Chuck Knoblauch's picture

Real GDP is negative, MORON!

BiteMeBO's picture

There is no escaping the FED Seasonal excuses:


Winter - Snow, Ice, Flooding

Spring - Flooding, Tornadoes

Summer - High Temps, Drought, Tornadoes, Hurricanes

Fall - Hurricanes, Early Winter Weather, Flooding







SheepDog-One's picture

The mantra this summer will no doubt be 'Unseasonably hot summer temps stiffling spending', however the markets will probably be about 10% higher than now by fall anyway.

ParkAveFlasher's picture

IMO the meme will be "rainy summer washes out mall traffic".  Hat tip to Ben Franklin and the OFA, not only does it tell you when to plant turnips by the lunar cycle, but it is also a socio-economic forecasting matrix generator.

101 years and counting's picture

pick up where in the economy?  mortgage index at/near all time lows and retail sales surge due to massive inflation in food/energy/utilities.  the fed can take their forecasts and jam them down yellen's throat.  finally, something that could choke the fat cow.

NDXTrader's picture

Well, if there is one thing consistent among bureaucrats it's that they will never admit they're wrong. And why should they? No one ever holds them to account

QQQBall's picture

My spending went up. ACA is a killer - 50% higher premium for 1/2 the coverage - yup. Gasoline at 4.50 a gallon and the gas gets 15% less mileage. Just water down the gasoline some more and CONsumer rises; voila. Borrow and give everyone free insurance and CONsumer spending rises cause no insurance expenses....


First the income statement, then the balance sheet. We are there now as FOMC & gov't torch the USSA's balance sheet

arby63's picture

Buy the FUCKING weather, foreign policy, war, welfare, Obamacare, poverty, dying economy, children in charge, lying sack of shit opportunity 

magnumpk's picture

"We have no clue." There, that was only four words.

SheepDog-One's picture

'We at the FED know 1 thing- creating money out of thin air and stuffing it into TBTF banks vaults'......every Fed statement eva.

Ban KKiller's picture

Doubleplus good for sure. I feel so much better...

Put Silver on sale please. I have a boating accident scheduled. 

bnbdnb's picture

We shouldn't always assume that gay people like it up the ass.

JRobby's picture

Fed is in "experimental" mode now. "Let's try tapering with no qrowth this quarter. What's the worst that could happen..."

SheepDog-One's picture

I believe the 'Fed is tapering' line about as much as I'd believe kilo bars of gold shoot out of Yellins ass every day at 3:30.

rosiescenario's picture

Obviously this guy has 3 pre-written reports: Fed tapers, Fed does not taper, or Fed does nothing.

perelmanfan's picture

It's clear that the Fed's strategy is to:

  • Keep printing
  • Deny that they are printing
  • Deny that there is inflation

The tricky part might have been #3, but the Fed is leveraging the average American's ADHD, and inability to notice trends over time.

Ned Zeppelin's picture

Well, they are tapering the "visible taper," that is for sure, and no doubt doubling up on the not-so-visible "anti-" taper.