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FOMC Minutes Show Fed Fears Investors Are Too Complacent; QE To End In October
Having continued to taper, expressed no fear of inflation, and been nothing but confident that Q1 was nothing-but-weather at the press conference, the FOMC Minutes:
- *SOME FED OFFICIALS SAW INVESTORS AS TOO COMPLACENT ON RISKS
- *FED SAW INSUFFICIENT INVESTOR UNCERTAINTY ON ECONOMY, RATES
- *FOMC SEES QE ENDING WITH $15 BLN CUT IN OCT. IF OUTLOOK HOLDS
- *FOMC SAYS LABOR MARKET `GENERALLY IMPROVED,' WAGE RISE MODEST
- *FED OFFICIALS: SUPERVISORY TOOLS SHOULD ADDRESS EXCESSIVE RISK
- *FOMC PARTICIPANTS SAW ECONOMY REBOUNDING IN SECOND QUARTER
Strange not a mention of the surge in Treasury fails but this appears as close to a "sell" as the Fed will give...
Pre-FOMC Minutes: S&P Futs 1964, Gold $1323.50, 10Y 2.59%, Oil $102.22, JPY 101.75
Some of the key excerpts:
On complacency:
The VIX, an index of option-implied volatility for one-month returns on the S&P 500 index, continued to decline and ended the period near its historical lows. Measures of uncertainty in other financial markets also declined; results from the Desk’s primary dealer survey suggested this development might have reflected low realized volatilities, generally favorable economic news, less uncertainty for the path of monetary policy, and complacency on the part of market participants about potential risks.
On the October end to QE:
While the current asset purchase program is not on a preset course, participants generally agreed that if the economy evolved as they anticipated, the program would likely be completed later this year. Some committee members had been asked by members of the public whether, if tapering in the pace of purchases continues as expected, the final reduction would come in a single $15 billion per month reduction or in a $10 billion reduction followed by a $5 billion reduction. Most participants viewed this as a technical issue with no substantive macroeconomic consequences and no consequences for the eventual decision about the timing of the first increase in the federal funds rate—a decision that will depend on the Committee’s evolving assessments of actual and expected progress toward its objectives.
On lack of investor certainty:
A few participants thought that, given the degree of uncertainty about the effects of the Committee’s tools on market rates, it might be preferable to focus on an administered rate in communicating the stance of policy during the normalization period
On lack of wage frowth:
A couple of participants noted that, to date, consumer spending had been supported importantly by gains in household net worth while income gains had been held back by only modest increases in wages. In their view, an important element in the economic outlook was a pickup in income, from higher wages as well as ongoing employment gains, that would be expected to support a sustained rise in consumer spending.
Odd how said pickup never happens then?
Then there was the absolutely laughable normalization, which may be coming sooner than people think, although probably not as nobody has any idea what it means.
Overall, participants generally expressed a pr eference for a simple and clear approach to normalization that would facilitate communication to the public and enhance the credibility of monetary policy. It was observed that it would be useful for the Committee to develop and communicate its plans to the public later this year, well before the first steps in normalizing policy become appropriate. Most participants indicated that they expected to learn more about the effects of the Committee’s various policy tools as normalization proceeds, and many favored maintaining flexibility about the evolution of the normalization process as well as the Committee’s longer-run operating framework. Participants requested additional analysis from the staff on issues related to normalization and agreed that it would be helpful to continue to review these issues at upcoming meetings. The Board meeting concluded at the end of the discussion.
More on the total confusion within the FOMC:
The dispersion of projections for the value of the federal funds rate was little changed in 2015 but widened slightly in 2016. Most participants expected that the federal funds rate at the end of 2016 would still be significantly below their individual assessments of its longer-run level. For about half of these participants, the low level of the federal funds rate at that time was associated with inflation well below the Committee’s 2 percent objective. In contrast, the rest of these participants saw the federal funds rate at the end of 2016 as still significantly low despite their projections that the unemployment rate would be close to or below their individual longer-run projections and inflation would be at or close to 2 percent at that time. These participants cited some combination of a lower equilibrium real interest rate, continuing headwinds from the financial crisis and subsequent recession, and a desire to raise the federal funds rate at a gradual pace after liftoff as explanations for the still-low level of the projected federal funds rate at the end of 2016. A couple of participants also mentioned broader measures of labor market slack that may take longer to return to their normal levels than the unemployment rate.
Estimates of the longer-run level of the federal funds rate ranged from 3¼ to about 4¼ percent, reflecting the Committee’s inflation objective of 2 percent and participants’ individual judgments regarding the appropriate longer-run level of the real federal funds rate in the absence of further shocks to the economy. Compared with March, some participants revised down their estimates of the longer-run federal funds rate, with a lower assessment of the longer- run level of potential output growth cited as a contributing factor for the majority of those revisions. As a result, the median estimate of the longer-run federal funds rate shifted down to 3.75 percent from 4 percent in March, while its mean value declined 11 basis points to 3.78 percent.
Finally, use of "liftoff":
It was noted that, in the staff’s models, making a change to the Committee’s reinvestment policy prior to the liftoff of the federal funds rate, at the time of liftoff, or sometime thereafter would be expected to have only limited implications for macroeconomic outcomes, the Committee’s statutory objectives, or remittances to the Treasury.
...
Many participants agreed that ending reinvestments at or after the time of liftoff would be best, with most of these participants preferring to end them after liftoff.
...
the median dealer had expected reinvestments to end before liftoff.
...
participants cited some combination of a lower equilibrium real interest rate, continuing headwinds from the financial crisis and subsequent recession, and a desire to raise the federal funds rate at a gradual pace after liftoff as explanations for the still-low level of the projected federal funds rate at the end of 2016.
Full hawkish minutes:
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ahahah!
Gee, who would have expected this?
Live Gold:
http://www.pmbull.com/gold-price/
Live Silver:
http://www.pmbull.com/silver-price/
Thw whipsaws are laughable.
I just love how they still have the gall to talk about improving economic conditions after even with their massaged, bullshit numbers, they still admitted to a -2.9% 1st quarter GDP. But don't worry, just the weather, everything is fine.
October is the month when crashes happen (see 29, 87, 08)
"Belgium" is prepared to further step up their purchases as the Fed exits QE.
Translation: Ending QE means the end of any promises by the Fed.
Which means "Belgium" can and will be cut out too without any need to announce it as with QE.
So bend over!
Fundamentals baby. It's all good. Even Janitors will be making $15 per hour. Buy, buy, buy!
I told Mrs K that I should get a raise to $15/hr for my household duties and she told me to go sleep in the woods, eat bugs and reminded me that I know where my hand is.
Who is the Fed referring to as 'investors'???? There aint no true investors left in this market. anyways, arent they the 'ones' ordering the purchases of all the stocks to begin with??
Remember when China told us back in Jan? that the FED was out by November? Better listen to those guys as they have a vested interest..... Remember what they said about rate hikes?
I guess this means the politicians should be expecting an "october surprise."
No. It's about FUNDING now, not fundamentals.
As in the U.S. Treasury won't get any fucking funding from they're previous foreign bond buyers cause they've all had it with our bullshit "economy" and Obozo as well!
So yields are about to spike and equities are about to be dumped like the shit they really are.
The FEDs "primary dealers" via Belgium, or EUROCLEAR ?
So William Dudley, of the NY Fed, puts on his Belgium hat on and buys US treasuries.
Thank God for reverse-repos!
in the future, please to use my more thoughtful pose for your accompanying photo teaser
hugs,
mysteryellens
Bullish...watch for tons of M&A deals in the next 4 months
DOW headline on my system:
07/09/2014 13:00 *Fed: Some Officials Concerned About Persistent Low Inflation
What Farking low inflation? These guys don't go to a grocery store do they?
My take when they say low inflation...Credit expansion isn't great enough to keep the ponzi going
Same in Europe. They keep hammering in our heads that there is low inflation to keep going with unconventional measures. Great system: The only number that has to be manipulated is the inflation rate. Then all the rest will be done "according to the plan" to "save us" from the terrible deflation threat.
"NO WORRIES, bigger balance sheets don't lead to inflation anymore! We will easily extract the money from the system once the time is right".
This time it's different!
Ladies and Gentlemen, we have entered the negative velocity zone. Please fasten your seatbelts to prepare for the death spiral.
They have done 2 things to mask it. The first is common knowledge, the second more subtle.
1. Keep changing the composition of the benchmark and, when that doesn't work, change the benchmark itself. ie,, hedonic pricing, substitution, go from CPI to CPI ex food/energy then to PCE and PCE less food/energy, etc.
2. Keep the focus on the monthly number or multiply it by 12 to focus on an annual run rate. NEVER show the cumulative number over 5, 10 or 20 years because that would highlight how much purchasing power has been stolen from the public.
Here's a beauty.
http://www.slate.com/blogs/browbeat/2014/07/02/_wood_pulp_in_burgers_it_...
The author says there's not enough plant fillers in burgers. I used to eat at MCD's when their burgers tasted like beef, over 20 years ago!
Don't remind me how depressing grocery shopping is. Went last night spent $70 or so and the fridge is still empty.
This market wanted to selloff on the news, but was caught and ramped by the plunge protection team, who is always standing ready to catch that falling knife. Jus an absolute crock of SHIT!!!
The FED wants everyone out of savings and into the stock market. Thats been their plan since the birth of ZIRP.
Everyone in the equities boat so it cannot crash!!
The FED will do every trick in the book to keep the bubble going, while at the same time saying they dont see bubbles, only "noise"
DOW 17,000! Again! It's like a birthday party for an Alzheimer patient.
Brussels to the rescue?
70 people listed as being in attendance.
Yep, every chance of a lock-tight cone of silence there then....
Nothing to see here folks......move along.
QE does not end until they withdraw ALL the dollars they have injected.
Issues that have matured are being used to buy more. They just will not be increasing the total QE amount beyond October(if you actually believe them).
QE does not end until "Belgium" and all other proxy buyers stop buying.
I cannot argue with that....
yeah they're like, 'we're not going to fuck with the market any more' and everyone is like, 'yeah right'.
this Fed organization has to be the most useless function in the US economy
the crap that yellen and her fellow con-artists bloviate - generalizations, blatant lying and irrelevant
end the fed
Worse than useless, they are destructive to the real US Economy.
They are extremely useful to the 1% and their cronies.
Dow sells off 8 points on FED warning of risks. First the BIS. Now the FED. You just gotta laugh.
the market has shrugged off this (sort of) "sell" signal.
Same old shit...Nothing but noise. Clear sailing ahead, continue dancing!
Risk....lol.. There is no such thing as risk in a riskless society.
Investors are complacent because you bail them out at the slightest hint of a loss.
Stop printing money and micro-managing every corner of capital markets, and then see what happens to complacency.
Talking constantly out of both sides of their mouths while they enable the kleptocratic dismantling of the global economy. Lamposts are too good for these people.
I guess Zimbabwe will now start buying US treasuries.
"*FED SAW INSUFFICIENT INVESTOR UNCERTAINTY ON ECONOMY, RATES"
WTF does that mean? They want us like mushrooms, kept in the dark and fed bullshit; or they want to tell us exactly when they are going to pull their monkey wrenches out of the economy?
"They want us like mushrooms, kept in the dark and fed bullshit", thanks for the laugh...ill use that agian...
so after 5 years of trying to get retail into the market, the fed feels investors are too complacent. So they should get back into cash. Okay....
"See!!!1 We warned you!!!"
Might be getting ready to pull the plug...
That butt plug has been plugged in for 7 years. I wonder what will come out?
dow plunging 0.3 percent from day's high
No worries. So long as Belgium doesn't also begin tapering, everything will continue as-is. BTFD or die!
What investors is this idiot talking about - the banks?
Kevin Henry?
no way they let the market free fall. No way in hell.
They must, in order to justify the next round of Wall Street handouts, more QE. Now that banks don't make money the old fashioned way, this is how they get their profits, at the world's savers' expense. Also, banks are probably already shorting, or will be by October.
This proves Yellen lied when she testified before Congress! The primary qualification for a Fed Chair is to LIE straight-faced without blinking!
When words have no true meaning, lies are subjective to the listener, not the speaker, who merely denies the implications.
Go ask Alice.
If I listened long enough to you
I'd find a way to believe that it's all true
Knowing that you lied straight-faced while I cried
Still I look to find a reason to believe
--Rod Stewart
Oh what a tangled web we weave when first we practice to deceive -
Did Stanley Fischer give any forward guidance on killing more Palestinian children?
. . . and then there's Eastern Ukraine -- so many children to kill, so little time.
Reading the minutes makes me wonder what drugs the Fed criminals are on. There will be no taper as it it is impossible to taper a ponzi scheme. These minutes are dishonest and misleading and will hopefully be used in court when these gangsters are finally brought to justice.
Court? Justice?
You're in for a big suprise there lucky.
Exactly. When 3 of the Supreme Court are of the same tribe as Yellin, the courts are rigged too.
have no fear grannies got everything covered
Complacent? Why worry? No body goes to jail. Everyone gets a bailout. ZIRP to infinity. Free Shit Army shopping until they drop. Polar Vortex gone.
"Some fed officials saw investors as too complacent on risk"
Translation:
We have our short positions established so pull the rug.
"wars over man, Warmer dropped the big one."
Bluto's Big Speech - Animal House (9/10) Movie CLIP (1978) HD
https://m.youtube.com/watch?v=q7vtWB4owdE
We're not on a preset course, though we will now describe in excuriating detail how we are on a preset course....
"While the current asset purchase program is not on a preset course, participants generally agreed that if the economy evolved as they anticipated, the program would likely be completed later this year. Some committee members had been asked by members of the public whether, if tapering in the pace of purchases continues as expected, the final reduction would come in a single $15 billion per month reduction or in a $10 billion reduction followed by a $5 billion reduction. Most participants viewed this as a technical issue with no substantive macroeconomic consequences and no consequences for the eventual decision about the timing of the first increase in the federal funds rate—a decision that will depend on the Committee’s evolving assessments of actual and expected progress toward its objectives."
Hey, without double-think, we'd have never made it this far.
It is amusing that nothing they do has anything to do with economic activity. They just think the market is psychologically ripe for a takedown. In the end, they are just speculators with a printing press and bad accounting processes to make sure they win.
OK so if I'm getting this right, the Fed is worried that the monster it created is lazy, they need to rename QE, and they're still pretending interest rates will go up very soon.
Yea well I'm not buying any of it.
more bullshit for the masses,
The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.
F. Scott Fitzgerald
If that's a"sell" (SP +8), I would not like to see a buy.
I'm shocked market is not up 250 points
Have we forgotten everything the Fed does, says, and farts is uber bullish?
Clearly nobody believes them, not even the algos.
Draghi at the plate............
QE will not end before the 2014 election unless they can somehow contain the economic fallout prior to the election. Economics is politics.
Planned developments on July 20th, 2014 are going to change all of that.
Nothing will happen on July 20th.
Maybe, maybe not. That comment Lagarde made is pretty weird stuff though. In front of National Press so that it goes to the insiders. Who else pays attention to National Press events? Why would Lagarde talk weird shit about numerology when she's head of the IMF? That was completely off the charts and had nothing to do with the "science" of global economics that she usually spews on about.
Heard the same shit all thru 2011, it was all just to get Obummer safely back in, then all bets were off. Bullshit, there's always an election pending somewhere.
Fed worried retail sheeple are just too complacent about markets....the very same markets the Fed has been hand holding ever higher daily, no drop has been allowed to last more than 24 hours in years and they're wondering why no one is worried? Bunch of total BS.
FED has lost all credibility and sheeple aren't thinking straight.
Well, folks FED is going to scare you all straight because that is what a cornered bully does until we all fear and respect them again.
All hail the FED!
A buck and what the average sheeple knows about the Fed will get you a cup of coffee.
The FED isn't talking to the avg. American. Never has and never will.
can't end QE, can't raise rates, can't reduce the balance sheet, can't let markets fall.
there are a lot of can'ts surrounding the Fed right now.
what CAN the Fed do?
*crickets*
On a side note, Boehner. As a Ohioian, Floridian, and South Carolinian. Your career is over.
Fed says its crazy to buy stawks....indexes take off to highs of month...awesome!
Received radio signals from deep space indicate that an alien civilization is willing to buy our bonds, they are scheduled to arrive in October - just in time!...And you thought the FED was full of shit - you silly boy...
As soon as there is a bit of tankage Yellen and her money printers will be back doing the QE jig again.
Yep, they need a good crash to justify the next round.
Look at what the Fed does, not what they say.
So far their back-dooring QE and announcing tapering.
"Everything is fine, nothing is wrong" - speech
*gets off stage and hurries towards exit*
What a load of economic waffle and/or economic bullshit.