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FOMC Minutes Show Fed Fears No Inflation Risk; Worries About Complacency, Discusses "Low Level Of Volatility"

Tyler Durden's picture




 

These are the minutes from an FOMC meeting that raised economic assessments for the year the day that Q1 GDP printed at +0.1%. No big surprises from the minutes...

  • *FED SAW NO INFLATION RISK IN FUELING JOB GROWTH, MINUTES SHOW
  • *FOMC PARTICIPANTS SAW `NEARLY BALANCED' RISKS TO ECONOMY
  • *A NUMBER OF FOMC PARTICIPANTS SAW POSSIBLE RISK IN WEAK HOUSING
  • *SEVERAL FOMC PARTICIPANTS SAID LOW VOLATILITY MAY SIGNAL RISK

More of the same from the FOMC minutes - which have been carefully prescribed to reflect just enough confusion as to provide every stock bull (and bond bear) with just enough ammo to BTFD once more unto the breach. With 2 Fed speakers yesterday and 4 today, it seems the Fed is keen to interpret the minutes for everyone through the only tool they have left - communications. Volatility is a concern due to complacency; low rates have consequences; new normal terminal rate lower than historical norm; taper will proceed; doves more dovish, hawks more hawkish.

Pre-FOMC Minutes: S&P Futs 1882.00, Gold $1288, 10Y 2.54%, EUR 1.3660

From Esther George this morning:

  • GEORGE: FOMC DISSENTS SHOW VALUE OF `INTELLECTUAL HONESTY'
  • GEORGE SAYS GETTING OUT OF ASSET PURCHASES `UNCHARTED  WATERS'
  • GEORGE SAYS HAVING RATES LOW SO LONG  WILL HAVE `CONSEQUENCES'

And Kocherlakota went full dovetard earlier:

  • KOCHERLAKOTA SAYS FED SHOULD CONSIDER PRICE-LEVEL TARGETING
  • KOCHERLAKOTA: PRICE-LEVEL TARGET SERVES AS AUTOMATIC STABILIZER

Some of the highlights. First, on inflation:

Many participants saw the recent behavior of the prices of food, energy, shelter, and imports as consistent with a stabilization in inflation and judged that the transitory factors that had reduced inflation, such as declines in administered prices for medical services, were fading. Most participants expected inflation to return to 2 percent within the next few years, supported by highly accommodative monetary policy, stable inflation expectations, and a continued gradual recovery in economic activity. However, a few others expressed the concern that the return to 2 percent inflation could be even more gradual.

On "balanced risks"

In general, participants continued to view the risks to the outlook for the economy and the labor market as nearly balanced.

On housing and mortgages:

A couple of participants noted that mortgage credit availability remained constrained and lending standards were tight compared with historical norms, especially  for purchase mortgages. However, reports from some Districts indicated that real estate and housing-related business activity had strengthened recently, consistent with the solid gains in consumer spending registered in March.

On bond bubbles:

A couple of participants noted that conditions in the leveraged loan market had become stretched...

On VIX:

Two others saw declining credit spreads, particularly on speculative-grade corporate bonds, as consistent with an increase in investors’ appetite for risk. In addition, several participants noted that the low level of expected volatility implied by some financial market prices might also signal an increase in risk appetite.

And, drumroll, Russia and Ukraine:

a number of participants pointed to possible sources of downside risk to growth, including a persistent slowdown in the housing sector or potential international developments, such as a further slowing of growth in China or an increase in geopolitical tensions regarding Russia and Ukraine.

Full minutes below:

 

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Wed, 05/21/2014 - 14:05 | 4782033 AllThatGlitters
AllThatGlitters's picture

Finally getting some movement in gold and silver.

Live Gold Chart: http://www.pmbull.com/gold-price/

Live Silver Chart: http://www.pmbull.com/silver-price/

What's it been, a month of sideways? Was near death from boredom!

Wed, 05/21/2014 - 14:20 | 4782081 BTFDemocracy
BTFDemocracy's picture

Was thinking same with Bitcoin.. a month of sideways = death from boredom.

 

Wed, 05/21/2014 - 14:29 | 4782098 nope-1004
nope-1004's picture

The truth is the opposite to their statments.  The Fed is keenly afraid of inflation, hence smashing the barometer of currency debauchery:  Gold.

Like I give a shit what the f'n Fed says.  Bunch of lying crony fascists.  I guess posting it is good, because we can then compare the notes going forward from their false statements, like "subprime is contained".

lol

 

 

Wed, 05/21/2014 - 14:33 | 4782130 bonderøven-farm ass
bonderøven-farm ass's picture

< 2 fucking %....?!?!  Relative to what?

Can someone please point out these metrics our monetary masters are using....it seems I am living in an alternate universe.

Wed, 05/21/2014 - 14:07 | 4782037 JustObserving
JustObserving's picture
Fed Fears No Inflation Risk

You will not fear any inflation risk either if you are paid $250,000 per hour.

Wed, 05/21/2014 - 14:14 | 4782063 101 years and c...
101 years and counting's picture

this is an outright lie.  yellen fears the massive food inflation.  eating 10 lbs of bacon has gone from $45 to $70 per day.  she notices this, i guarantee it.

Wed, 05/21/2014 - 14:19 | 4782075 pods
pods's picture

Just cause he speaks softly there is no need to rip him about being a woman.

Sheesh.

pods

Wed, 05/21/2014 - 14:23 | 4782095 ihedgemyhedges
ihedgemyhedges's picture

Is it kosher bacon?????????

Wed, 05/21/2014 - 14:30 | 4782117 Eyeroller
Eyeroller's picture

Why should the Ponzi Jew Munchkin care about bacon prices?

Wed, 05/21/2014 - 15:38 | 4782303 Mr. Magoo
Mr. Magoo's picture

Thats it, I am definitely not buying a house because of whats happening in Russia or Ukraine 

Wed, 05/21/2014 - 14:05 | 4782038 Obama_4_Dictator
Obama_4_Dictator's picture

Ummm it's still trading sideways.....

Wed, 05/21/2014 - 14:07 | 4782045 AllThatGlitters
AllThatGlitters's picture

I see a small dip. Granted, not as much as we are used to, but it seems to be getting more difficult for them to create those $100 dumps as of late.

Wed, 05/21/2014 - 14:06 | 4782040 Aknownymouse
Aknownymouse's picture

Maybe K-hen should start buying some VIX futures with the printed money. Here. Fixed it.

Wed, 05/21/2014 - 14:06 | 4782042 alien-IQ
alien-IQ's picture

"No inflation risk"

Just. Fucking. Stupefying.

Wed, 05/21/2014 - 14:21 | 4782089 wee-weed up
wee-weed up's picture

Fed taking cues on "bald-faced" lying from Obozo.

Wed, 05/21/2014 - 14:07 | 4782044 LawsofPhysics
LawsofPhysics's picture

Amazed that they published this, one member admitting that there will be consequences for printing money and handing it out to your friends...

really?  consequences for whom exactly?

Tick tock motherfucker.

Wed, 05/21/2014 - 14:12 | 4782049 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

No Hope, NO JOBS, and No change (literally) bitchez...

Wed, 05/21/2014 - 14:09 | 4782050 PontifexMaximus
PontifexMaximus's picture

Business as usual, big yawn.

Wed, 05/21/2014 - 14:10 | 4782052 buzzsaw99
buzzsaw99's picture

so next up s&p 500 @ 2500 then?

Wed, 05/21/2014 - 14:12 | 4782056 fonzannoon
fonzannoon's picture

Maybe the fed planned for the day to come where they would end QE. In order to do this they are banking on two things. 1) they own a substantial portion of the UST market. 2) they have required the banks to hold a substantially higher amount of UST's for collateral requirements. This gives the fed the ability to keep rates extremely low and does not allow anyone to come in and overthrow the bond market. As long as rates stay low people will stay in stocks for yield and the "idea" of growth. Whamo, No market crash. Maybe it is just that simple.

Wed, 05/21/2014 - 14:17 | 4782067 maskone909
maskone909's picture

if thats the case, they will continualy have to raise the bond holding requirements of banks.  doesnt send a good message to forign countries.  but i guess there is always belgium.

Wed, 05/21/2014 - 14:26 | 4782092 Quinvarius
Quinvarius's picture

I have been thinking about the bond/interest problem and how it impacts pension funds.

The Fed is going to have to repackage bonds into a new a product so the inflated market value is locked in at the end of the term, the difference paid by them, and then pay a higher rate on their product out of their own pocket.  That way they can give out higher interest and maintain face value artifically high.  Plus they can get the balance of it off of their asset sheet by selling it.  They need to create a frankenstein.

Wed, 05/21/2014 - 14:26 | 4782108 maskone909
maskone909's picture

myra

Wed, 05/21/2014 - 14:31 | 4782121 Quinvarius
Quinvarius's picture

It would make sense.  But I don't think the public could ever absorb it all.  They don't even save now.  I think the banks and pensions would have to buy it.

Wed, 05/21/2014 - 14:11 | 4782057 Let them eat iPads
Let them eat iPads's picture

Markets jerk up , then jerk down.

 

Bernanke still a jerk.

Wed, 05/21/2014 - 14:19 | 4782076 Grande Tetons
Grande Tetons's picture

After this process is repeated....the result can get messy. 

Wed, 05/21/2014 - 14:32 | 4782127 Eyeroller
Eyeroller's picture

But no one is jerking off.  (Especially when treated to photos of the Ponzi Munchkin)

Wed, 05/21/2014 - 14:11 | 4782058 Bryan
Bryan's picture

Complacency?  'Ya think??

Wed, 05/21/2014 - 14:12 | 4782060 Quinvarius
Quinvarius's picture

Not much of a stock pump on this.  Not that it deserves one.  But you'd expect them to try and run it.  Spider sense...tingling...

Wed, 05/21/2014 - 14:15 | 4782064 BeetleBailey
BeetleBailey's picture

These fuck-bot banker puppet cuntnozzles are delusional. Outright bat-shit fucking crazy.

Inflation? LOL....fuckin please....scanned this asinine "farticle" and these thoughts went through my mind....

FULL ...METAL....JACKET.....SET TO AUTO....PULL TRIGGER.....UNTIL CHAMBER IS EMPTIED.....RE-LOAD....LOCK AND LOAD.....REPEAT UNTIL BARREL OF WEAPON IS SMOKING ............

Wed, 05/21/2014 - 14:19 | 4782074 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

so this is "good news" in the short term, or in other words, 2 minutes, then sort of bad news for 10 minutes, and then back to normal. 

Even the markets are starting to yawn at these orwellian-speak, content-less minutes. It's funny how the algo's can't even decide whether to go up or down anymore, so they do both for a while (and I'm sure that someone is making money there). 

Wed, 05/21/2014 - 14:24 | 4782097 AllThatGlitters
AllThatGlitters's picture

That sounds about right, actually.

Wed, 05/21/2014 - 14:19 | 4782077 adonisdemilo
adonisdemilo's picture

How can there be any risk from any of the numbers when they use any old number that they think will justify their stupidity without the "muppets" catching on?

Wed, 05/21/2014 - 14:21 | 4782088 q99x2
q99x2's picture

Sounds to me like they are robbing us blind.

Arrest Janet Yellen for treason. Replace the FED with Bitcoin.

Wed, 05/21/2014 - 14:53 | 4782177 OC Sure
OC Sure's picture

 

 

 

Its not robbery they are engaged in; that is what taxes are.

The Fed is engaged in theft; that is they faciitate stealing by deception instead of force.

The Fed's means of deception is to tell everyone they have a monetary policy while they do not.

The Fed has a counterfeiting policy, not a monetary policy.

Wed, 05/21/2014 - 14:24 | 4782099 OC Sure
OC Sure's picture

 

 

 

FOMC minutes are balderdash.

Forget the contrived drivel we are spoonfed weeks later and require that the meeting be a live CSPAN event.

Televise the actual meeting live as it happens so the recipients of the Fed's decisions can see and hear them exactly as they are.

Citizens should accept nothing less.

 

Wed, 05/21/2014 - 14:27 | 4782110 fonzannoon
fonzannoon's picture

I for one am reassured by these comments from the fed. I am watching food prices go ballistic and crude push through resistance at already high levels. the fed has certainly alleviated my concerns with their comments.

Wed, 05/21/2014 - 14:34 | 4782132 locklimit
locklimit's picture

So...  Lets run through this one.  Job growth is not good enough - fed keeps rates low - companies borrow cheap money - execs use money to buy back stock - execs sell own granted stock options to the company - execs then fire employees to keep job growth low ---> back to the beginning

 

Any CFO jobs open?  I think i got this covered

Wed, 05/21/2014 - 14:45 | 4782167 pragmatic hobo
pragmatic hobo's picture

obviously these fuckers don't have to shop for food, pay for utility, or fillup their car with gas ... what a bunch of fucking imbeciles ...

Wed, 05/21/2014 - 14:47 | 4782173 orangegeek
orangegeek's picture

*FED SAW NO INFLATION RISK IN FUELING JOB GROWTH, MINUTES SHOW

 

LMFAO - Deflation folks!!!!

Wed, 05/21/2014 - 14:52 | 4782185 Colonel Klink
Colonel Klink's picture

There's plenty of inflation if you look at food.  FUCKERS!!!

Wed, 05/21/2014 - 14:56 | 4782193 silverserfer
silverserfer's picture

"and Thanks to our friends in Belgum for helping support this honorable banking institution." 

Wed, 05/21/2014 - 15:22 | 4782251 cobra1650
cobra1650's picture

When u have global labor arbitrage in perpetuity then u never have LABOR inflation.  This is so beautiful for central banks and global corporations.   LABOR should be permanently stripped from the inflation calculation.

Wed, 05/21/2014 - 15:22 | 4782252 SharkBit
SharkBit's picture

It is kind of funny how main stream media spins the story. 

http://www.bbc.com/news/business-27512643

To be sure, interest rates can never go back up but how long can they continue to lie to the public inducing them to BTF story.  Kind of funny to watch though.  Enjoy.  

Wed, 05/21/2014 - 15:43 | 4782319 ejmoosa
ejmoosa's picture

I remember the good ol' days, when I used to believe supply and demand set the rates, and we did not need all of these overseers. 

Instead I get reminded daily that the ignorant believe they have a better grasp of the situation than there would be of hundreds of millions of Americans set the rates by their supply and demand.

Wed, 05/21/2014 - 15:46 | 4782329 crazybob369
crazybob369's picture

Perhaps these spit drooling morons(with apologies to spit drooling morons everywhere) should look at a chart of crude oil prices.  It looks, to me at least, that the price is about to go ballistic.  Ya'll have fun filling up your RV"s and SUV's this weekend.  By Labor Day, you'll be lucky if you can afford to fill up a Civic.  Of course, the spit droolers don't care because they don't actually have to pay for their own gas.  God help us, cause I think it's the only chance we've got.

Wed, 05/21/2014 - 16:05 | 4782393 notadouche
notadouche's picture

Impossible to see inflation risk when you continuously do whatever you can to manipulate the calculation of inflation to show it as being low and in control.  You do not need to have a PHD in economics to see we are in the midst of crippling inflation yet the PHD egghead economist running the show can't manage to get even a whiff of inflation.  Unfuckingbelievable.  

Wed, 05/21/2014 - 18:46 | 4782995 SharkBit
SharkBit's picture

This is a ponzi scheme folks.  Just think being a Madoff client.  Rates can never go back up. The talking heads are circling the wagons, lying left right and center and buying time is all.  They are going to kill the USD (simple as that).  Just accept it and prepare yourself as best as possible for the worst case scenario.  Suppressing the price of gold and blowing the final market bubbles are perhaps the last chance to benefit before it all blows.  Best to organise yourself.  Consider it a gift for now.

Wed, 05/21/2014 - 19:28 | 4783116 Sticky Wicket
Sticky Wicket's picture

Just had the pleasure of reading some comments on a BBG article discussing inflation. The commenters were claiming the CPI is extremely accurate and the only people who say otherwise are nutters. I'm now convinced that government employees post comments on BBG articles.

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