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Hilsenrath Confirms Hawkish Fed Focused Domestically, Rate Hikes Coming
Instead of reading between the lines of the 28 page FOMC minutes, we have The Wall Street Journal's Jon Hilsenrath to explain to us what we should believe. His message is not dovish. Despite tumult in financial markets, weak economic conditions abroad, and risks that low inflation could drift lower, Hilsenrath notes that the Fed forged ahead with a decision to end the central bank’s bond-buying program because the domestic economy and labor market appeared to be on course for further improvement. Furthermore, officials added a new twist: a debate about whether they should add new information in their official policy statement on how quickly rates will rise once increases commence.
Federal Reserve officials were preoccupied at an October policy meeting with tumult in financial markets, weak economic conditions abroad and risks that low inflation could drift lower. But they forged ahead with a decision to end the central bank’s bond-buying program because the domestic economy and labor market appeared to be on course for further improvement.
Participants at the Oct. 28-29 meeting “pointed to a somewhat weaker economic outlook and increased downside risks in Europe, China, and Japan, as well as to the strengthening of the dollar over the period,” said minutes of the session, which were released Wednesday with the regular three-week lag.
“It was observed that if foreign economic or financial conditions deteriorated further, U.S. economic growth over the medium term might be slower than currently expected,” the minutes said. “However, many participants saw the effects of recent developments on the domestic economy as likely to be quite limited.”
...
Downward pressure on inflation is a more recent development.
“Most participants anticipated that inflation was likely to edge lower in the near term, reflecting the decline in oil and other commodity prices and lower import prices. These participants continued to expect inflation to move back to the Committee’s 2 percent target over the medium term,” the minutes said.
...
With the program now completed, many Fed officials are looking to drop the “considerable time” assurance. But the minutes left little clear indication of when and how this guidance might be changed.
Some officials wanted to drop the term at the October meeting. They didn’t want to appear locked into a specific time frame for their plans. “Considerable time” is generally interpreted in financial markets to mean at least six months, though the Fed has sought to play down that notion. Other officials thought this phrase still best described their plans, while others didn’t want to inadvertently send a signal of impending rate increase by removing the phrase.
To this discussion officials added a new twist: A debate about whether they should add new information in their official policy statement on how quickly rates will rise once increases commence.
...
“Some participants pointed out that, despite the market volatility, financial conditions remained highly accommodative and that further pockets of turbulence were likely to arise as the start of policy normalization approached,” the minutes said. “That said, more work to better understand the recent market dynamics was seen as desirable.”
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Did the unfunded liabilities on the balance sheet of the U.S.S.A. suddenly dissappear? Yeah, go ahead, raise rates, I triple dog dare you motherfuckers...
Thar she BLOWS!!!
Raise rates.
hahahahahahahahahahahahahahahahahahahahaha
FED talk, or SNL skit?
Sorry, I just had to laugh because after 6 years of the same "monetary policy" (printing, TNX manipulation, gold slamming, and oil/sanction warring) this FED is nothing but a bunch of liars. The member banks are insolvent. The FED is plugging holes in the architecture to stave off bankruptcy. The FED is not on our side.
HilsenGREEN is a first class lying pussy and a sorry excuse of a human being.
We are all far dumber for having listened to him for so long.
Are these motherfuckers buying their own bullshit? Raise rates, go ahead do it.
first by boom, then by bust. Get everyone in debt then make debt more expensive. Fuck everyone in the ass and buy their shit for pennies on the dollar. Become uber wealthy.
If there's a run on the dollar, like because of loss of sole reserve currency status. They could be forced to raise rates. THEN everything goes BOOM!
Can't tell you exactly when though.
Probably, right after an 'incident', like a US carrier is being sunk by Russia in the Med. or Black Seas.
Rate hikes coming soon
No fucking way. They may make a symbolic move and move them up a tiny bit, but any real hike would send the housing market down, which can't be allowed because there is way too much mortgage debt on the banks books that would go to shit. And those unfunded liabilities keep increasing from 4-6 trillion a year, which have to be paid for (if you believe they will be) with more borrowed money. Any rate hike will be small and temporary. Either that, or it'll be like EU QE, they'll just talk about it endlessly without actually doing anything and hope people still believe them
Mortgage debt you say? I guess you missed this;
https://www.congress.gov/bill/113th-congress/house-bill/5148/all-info
another bank bailout is already in the works.
German banks already engaged in the worst mortgage lending schemes at 120% LTV
House sold for 200k EUR, purchaser gets mortgage of 240k to pay for "renos".
15 yr fixed rate of 2 and a bit.
They don't know where to stuff the liquidity when deflation hits. Anyone willing to take moar will get moar. Banks are not prudent or have any reason to act responsible. ECB mandate is pretty clear from the top down.
Burn and churn it, baby!
OK, go ahead, make my day:
Rates rise ==> risk asset prices collapse ==> rates fall....to levels lower than where they started.
I hear you, LOP. But you're dead wrong. They WILL raise rates. A 1000 point Dow drop ain't gonna stop them this time. A hundred million-quadrillion dollars in unfunded liabilities doesn't matter to them.
Just because something makes no sense (to you and me) doesn't mean the Fed won't do it. Only in recent times have we ascribed God-like powers of omniscience and omnipotence to the Fed. I know it will be heartbreaking to watch them fuck up and do the wrong thing at the wrong time, but it's for your own good that you see it happen.
Somwhere out there are the Fed's banking buddies who are gonna make money off of this, no matter which way they go. Economy be damned. Federal debt be damned. They'll change course eventually, but not until they've proven their point- that they're still in charge of things.
Thanks for typing that for me. Wholeheartedly agree, this will be about the FED pounding whomever into submission and extolling over their crumpled body, "Now Who's Your DADDY?"
Any time, my friend. I damned well better be right. I got a sandwich bet with Doc Engali riding on this.
Agreed. They are doing the right thing, mostly out of ignorance, but also out of arrogance.
They can't stand to do nothing. They have to piss and moan and fiddle with the levers.
Even an old blind sow finds an acorn in the woods now and then.
Raise rates?
Not - going - to - happen.
Don't believe me?
Japan has preceded us down the road we're traveling for 25 years and still can't afford to raise rates despite the pending demise of the Yen.
So, yeah; just like LOP says: "Go ahead, raise rates; "I Triple-Dog-Dare-Ya!"
Naw, this is Draghi's evil twin just jawboning in the opposite direction. The ECB jawbones about loosening, but does little, the FED jawbones about tightening and does little as well. We are now out of touch with economics and into theatre. Except for a few out there, main street has no idea what tightening even means, just what the MSM tells them to think about it.
I will say it again. Rates can never raise as currently configured.
They also intend to maintain dollar dominance. It's down from 75% to 62% of world trade. This means they will need to suck China dry. Which explains the other article about allowing more Chinese Visa's, it's a way of drawing in that money.
Yep. I figure we got one more smackdown to metals...then the mother of all QE. They wont even call it QE. That'll be the launch.
The the U.S. government will default on it's obilgations, period. The debt never just dissappears, it must be paid, rolled over, or defaulted upon. Not going to happen Japan just shows you how pain-adverse humans are.
The dollar will die, as will all fiat. Then once everyone realizes that none of the wealth was real, poeple will have to look around to what real assets they have moving foward. Most will be idiots and not survive, but demographics and whoever has a hard-working population with manufacturing and technical know-how will rise to the top and the cycle will start again.
same as it ever was...
Think of it like this. If the FED raises rates, the US gov goes kaput.
The US government protects the FED...............
I used to think of the FED and US gov as a married couple. Now I see that Siamese Twins is a more apt description.
You aren't going to have one twin kill the other twin. Not going to happen.
pods
Pods was just thinking how intertwined they were while posting above. You nailed it! Conjoined at the head, to separate means for sure one will die, maybe both.
No default they just will not give you the promised goods.
Canada already cut 2 years of old age security payments to half the baby boom.
No one protested.
Won't higher rates cause the value of bands held by pension funds, institutions, to fall?
Going to fun to watch.
An American, not US subject.
I tried marketing a reality TeeVee show, but no one thought that the sheeple would be interested in watching "The Great Unwinding."
Yes. But they dont care.
Current TV, when Al internet owned it, did some documentary type stuff on the great recession fallout, how families coped etc...
This time there will be nothing to watch, as all transmissions and devices will be non functioning.
Yes Janet, go ahead and put the prime rate at 6% = historically low.
The employment situation is so good, and inflation so low, why wouldn't you, Janet?
Apropos of little - how many banks are outside the FRS, and how will rate hikes affect them?
But they forged ahead with a decision to end the central bank’s bond-buying program...
...knowing that the TBTF banks would obey orders and pick up the slack.
Naked and obliviously steering course from their glass pilots house.
Redolent of Kremlin watching a generation ago. Chatterers would chatter about immanent change on grounds of who stood next to whom in what order from the Premier. But nothing ever changed. It was a game the Russians and their client states played. There can never be a rate hike as at this point it would crash the system just as there could never be reform in the Soviet bloc a generation ago until the Soviet state itself was abolished.
“Most participants anticipated that inflation was likely to edge lower in the near term, reflecting the decline in oil and other commodity prices and lower import prices"
But... but.... food and energy are not included in the Goverment Inflation calculation?
Until they are?
LOL, more Fed nonsense. Their bluffing because they know their creating huge bubbles.
If markets decline a bit they'll announce QE 4. Next time $125 billion/month.
nope ... they're out of supply
need another recession (and accompanying $trillion deficits) to restock before further QE
Right. That's why Japan is going to pour their pension cash into US bonds. That buys them another year to orchestrate the recession.
Ha! I'll believe it when the 10yr yield returns to it's all time average of 4.80-5.00%! LOL
These people are soooooo full of shit but it's fucking great watching them squerm! They are actually terrified of the Frankenstein Market they've created and it's starting to show.
Keep feeding us lies and please, by all means, have the balls to raise rates and see what happens!
raise rates?
are they insane?
King Dollar will rampage
So the Fed pretty much puts a stake in QE, verified by Hilsenrath, but the Bullard moar QE statement and the 10% increase stands. It all makes perfect sense.
They really can't raise rates. They know it.
While other currencies are declining and the US dollar they have this guy announce this.
This guy is sooo full of shit.
More nonsensical BS from this guy.
It's to verbally try and control the bubble they have created.
I agree they can't. But Bullard's statements were about reversing course on QE, which is a little different than raising rates. In any case, I do understand that it was a message that they'll step in if the market drops. It's a stock market put.
If you can access money at 0.01% QE is still very much alive.
that's a great fucking point, Laws.
Even better when you can use that virtually free cash to buy short term treasuries at 3-8 times the rate.
Anyone who doesn't think QE was mostly about propping up deficit spending, and a giveway to Goldman Sachs et al isn't thinking.
FOMC out of touch
on par with their june 2008 meeting ... where they RAISED growth rate for H2 2008
total bullshit. wait til Fischer & Plosser are replaced in the new year by a couple of do nothing academic doves.
fuck you Hilsenrath, you bag toting cocksuker.
FED funds to the moon!!!! That's if you believe the moon is equal to 1%.
We've been polishing these zirp things for six years. If we take them out there in that rain, they'll rust up on us. [/Cowboy, Kelly's Heroes]
Bullshit. .GOV is already spending 10% of revenue on debt service.
There have already been cuts to the Pentagon, not nearly enough, and these will soon be reversed because ISIS is the new existential threat [but there's no chance they'd cross the southern border - ever.].
Rate hikes, unless very, very small, will harm the American war machine's ability to maintain regime change and occupation actions in accordance with the Oded Yinon plan...
The same neocons who were in power under Bush are still, many of them, embedded in the administration of Hopey von Change. They control State [think Kagan Nuland] and Treasury and they, whether you've heard it or not, have as their single hive mind thought using US blood and treasure to facilitate Greater Israel - even if it means manufacturing evidence [Office of Special Plans] or a false flag [9/11] to get what they want.
Only one thing will make them raise rates, against their will, by the way. If anyone wants to guess what this only thing is, couple of hints... its the onlly thing that has made governments stop printing money throughout history. And it begins with letter i... of inflation. In absence of inflation this horrible human beings, deeply incompetent bureaucrats will keep on kicking the can a bit further. ¿Higher rates? Yeah... when they are forced to, but it will be way to late by then.
Hilsenrath confirms hawkish FED....rate hikes coming. ......NEVER. it's never going to happen. Period. End of story. Full stop.
i completely agree. I dont care what this hack thinks. Rates are staying low to zero for a generation, possibly several. This whole article is bollocks.
there is a reason why usuary was considerred a sin. its widley accepted now and we are reaping the consequences of the compromise of virtue.
fixed fee loans with sound money are the only moraly acceptable way to stimulate the economy.
Will they stop the TOMO train? $1,450,491,000,000 so far in November. The last $441,253,000,000 was at 7 bp.
ha ha ha ...the Fed will kill the government with higher interest rates?....it simply cannot/will not happen....QE4+ sure...higher rates...'Not in my lifetime'...Ben Bernacke
If mortgage interest rates begin to creep higher, then despite the return of subprime, the housing market will take a body blow! The crop of elderly down sizers, and the failing crop of, student debt burdened, 20 something first home buyers will combine with rising mortgage rates to slash the wealth effect of rising home prices. Only when a home becomes valued at the cost of building it, rather than the speculative valuation, will people be able to live the normal American dream.
When I needed a new place to live, during 2006, a boom time, I searched the local RE market, the prices were high, very high, a junker home in an average residential small town street was way over valued. So I took the pricing information I had gained, and then drew plans for a new home, had a qualified friend draw construction plans, took them to another friend who is a local contractor and builder. I layed out what I needed to be done and got his best bid. Then I compared the two "Average Home in 2006 prices in my market" versus "New Build using my contractor". The size and locations being basically the same. The New Build was 30K more expensive to me than buying a similar size 70 year old house with loads of work needing doing.
I said, lets spend 30K more and build a totally brand new home of very high workmanship. So for a mere 30K more I went from an overpriced piece of junk, to brand new, from the slab up. Lesson, when new construction so nearly mirrors the cost of existing homes, it makes no sense not to build! And by dealing with a bid from contractors, I had no middleman trying to make a margine between buyer and builder. Also no real estate brokers taking their cut.
Homes are way overpriced when you can build similar for only a marginally higher investment. Old junk should never be priced anywhere near the cost of new builds, minus a speculator in between.
Whatever.
Japan said the same for 20 years, trial baloon.
I'm waiting for Japan's downgrade to see what happens to interest rates there first.The way those basturds are leveraged it won't take much to collapse them first.They'll be the first ones to go down.
When fed raised rate, market rates sink. When fed cuts rate, market rates rise.
Check the charts.
Since when do these pukes care about the US or the people? If your buddies, family etc know ahead of time, you can crash the motherfucker and make a fortune off of it. Sooner or later it will happen and not as any "mistake" or loss of control, though it will be sold that way. Indebt the people, get the people used to the fact that you can buy, it will go up in price, then you use that "equity" as collateral to borrow more. Then, pull the rug, claim accident or ignorance and make a fortune with your cash buying stuff up after it's dropped 90% in value. Claim, "noone could have seen it" and you probably won't get a bullet in the skull.