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Fed Admits "Changes In Asset Prices", "Decline In Equity Prices" Influenced Rate Decision
The only line from the Fed minutes that matters:
Some participants commented that the recent decline in equity prices needed to be viewed in the context of overall valuation levels, which they saw as relatively high, and a couple noted that volatility had begun to subside.
During their discussion of economic conditions and monetary policy, participants indicated that they did not see the changes in asset prices during the intermeeting period as bearing significantly on their policy choice except insofar as they affected the outlook for achieving the Committee’s macroeconomic objectives and the risks associated with that outlook.
So "changes in asset prices", i.e., not only the stock market but yields and inflation expectations, did not "significantly" - so, only modestly - influence the policy choice decision "except" as to what they suggest about the outcome of said policy decision, in the process determining the Fed's decision for it.
Then again this shoudl come as no surprise: it was back in April when NY Fed head Bill Dudley admitted just this:
- DUDLEY: FED RATE PATH WILL BE SHAPED PARTLY BY MKT REACTION
And just like that the Fed finally realizes the reflexive trap it finds itself in, or as former Treasury economist Bryan Carter put it:
”Short-end rates move higher as the Fed gets closer to hiking, and that causes the dollar to strengthen, and that causes global funding stresses. They are creating the conditions that are causing the external environment to be weak, and then they say they can’t hike because of those same conditions that they have created.”
Which, ironically, confirms what we had joked about all along, namely that the Fed will never hike on a downtick, something the market - which has been in control of the Fed all along, and is precisely why the Fed no longer has credibility - knows all too well thanks its formalization in these minutes.
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And the "market" makers will turn the market down anytime the Fed contemplates hiking . . . so the bs will just continue.
Financial Terrorists, plain and simple, run by the Billionaire Boys Club ... Jamie D and Lloyd B
I wish they would just turn on the fucking printing presses and go for broke (satire intentional).
Just fucking DO IT you pussies. You know what's coming same as the rest of us. You know there is no way out of this. The Debt Rubicon was passed a long time ago, no later than 2008 by anyone's measure.
Why the pretense? Why the fascade? So you look like you're still in control? Too late. Nobody believes that any more. Your credibility is shot.
So go DO the only thing a discredited central bank CAN DO: PRINT. A lot.
Any extra little bit of time they can squeeze out to siphon off some more bullion for their bunkers, the better for them.
The longer they wait the LESS gold they will have. If they have much left to begin with.
They made a $4+ trillion investment in the market, so, yeah.
This also means ZIRP forever.
Oh, ZIRP will go away, alright.
It'll be replaced with NIRP.
Exactly. Time to bomb Syria to take attention elsewhere
The FED will only move when they are forced to
Exactly, how anyone with even a basic understanding of our situation can say with a straight face that it's even a remotely possible for the US to withstand higher rates between now and the end of time is beyond me.
Moar free money is assured so better get all that Facebook stock now wile it's still under 100 cause these bargain basement prices won't last!
Long Charmin, cause the shit is getting deep.....
Waist deep in it and they can still kick the can. Now that's talent.
A well developed skill.....
80+ months of zip and we are going into the shitter
That's why Barry wants to import thousands moar angry alien refugees ... give them gubmint welfare-Obamavouchers and then send them to the malls, all paid for with middle class taxpayers money.
It's what Piglosi calls, "stimulus."
The Fed screwed the pooch...
Municipal borrowing: "....they’ve been seizing on low interest rates to refinance higher-cost bonds. About two-thirds of the $312.5 billion issued through Sept. 30 has been for that purpose, Bank of America Merrill Lynch data show...."
Higher interest rates will end that scheme and start to blow up a few cities
ZIRP and NIRP 4EVA!
Roads in major cities are so crapped out it's hard to believe. Bridges, as your article states, are even worse. $4 Trillion of QE and where'd it go?
Banker, politican and MIC pockets.
The Courage to Rise
by Janet Yellen
'How I rose rates above the noise'
"The Audactiy of Being Fed Chariman"
My time.
It is coming.
It's negative rates ( new fed bankster calling for it) and infinite QE.
This is Zimbabwean e economics. Their end-game strategy.
Desperation implied.
under what legal authority is the FED allowed to consider the welfare of global/euro/chinese citizens/markets/asets, while it rapes american retirees of meager 3% interest rates for 10 years???
Seriously, is there not one senator or five representatives that are not corrupted and willing to go public with the scam? Nobody can break thru and make this an issue? Fuck them all with ol yellar's broomstick.
That's the main problem with the dual mandate - stable currency & maximum employment. "Stable currency" is a pretty straightforward goal, is easily measured, and the results of Fed actions towards that goal are largely predictable. Though it is still beyond me how "stable" has come to be accepted as meaning a loss of 25%-30% of your purchasing power every decade.
"Maximize employment", however, is such an overarching goal that there's no clearcut, obvious way to achieve it. Which means the policies in pursuit of that goal can't be flatly refuted or repudiated. It's simply a matter of opinion, and unless you're a member of the Fed your opinion doesn't count. It's no different than if a priesthood was tasked with appeasing the gods - something so nebulous and unverifiable that it, in practice, gives the priests the power to do whatever the hell they feel like doing.
One of the first things a new R president should do is simply reduce the Fed's mandate to that of stable currency.
Umm lol
https://www.tradingview.com/x/dYPu0UFD/
Markets don't even react to admited bankster/politician manipulation of citizen's lives.
We are lost...
Some participants commented that the recent decline in equity prices needed to be viewed in the context of overall valuation levels, which they saw as relatively high, and a couple noted that volatility had begun to subside.
During their discussion of economic conditions and monetary policy, participants indicated that they did not see the changes in asset prices during the intermeeting period as bearing significantly on their policy choice except insofar as they affected the outlook for achieving the Committee’s macroeconomic objectives and the risks associated with that outlook.
I'm wondering how much more incompetence these Fedfucks can actually get away with before somebody whose not worried about their reputation or their life starts calling these stupid fuckers out. Seriously. Fucking stupid. Its like the irony is so insane because you have the the most intellectually incompetent group of sychophants attempting to manage the most important monetary institution in the world - without consequence, or regard, for the failure to achieve ANY reliable outcome of ANYTHING - AT ALL.
Its fucking goofy!!
END THE FUCKING FED!!
Stealing this from someone else on-line because it fits so well:
Ben Bernanke - pompous pseudo-intellectual pissant.
The same goes for all central bankers.
OK, so let me get this straight ...
The Fed supports non-market determined asset prices and the ouright theft of money from people who believe that assets are overvalued.
Fed picking winners and losers. Banks picking winners and losers. There is something wrong about that that should be criminal in nature.
So in other words it is all a bubble that the FED is choosing not to deflate.
Unless it deflates anyway.
The FED is the problem not the solution.
The stock market crash of 1929 and the subsequent Great Depression cost Irving Fisher (February 27, 1867 – April 29, 1947) an American economist, statistician, inventor, and Progressive social campaigner much of his personal wealth and academic reputation. He famously predicted, three days before the crash, "Stock prices have reached what looks like a permanently high plateau." Irving Fisher stated on October 21 that the market was "only shaking out of the lunatic fringe" and went on to explain why he felt the prices still had not caught up with their real value and should go much higher.
On Wednesday, October 23, he announced in a banker’s meeting "security values in most instances were not inflated." For months after the Crash, he continued to assure investors that a recovery was just around the corner.
According to Macquarie Research:
https://app.box.com/s/bh0unh5y596z3ktwi6rwivmsnuyhwl1r
Equities – irrational exuberance?
In our latest commentary we ask whether equities are appropriately assessing risks or whether higher FICC volatilities are more rational. Both cannot be right.
Are equities reflecting fundamentals? Most leading and trade indicators seem to be highlighting that despite aggressive monetary easing by 20+ central banks, deflationary pressures remain strong and growth rates in both DMs and EMs are rapidly slowing. In response, FICC are signalling an elevated level of risk.
However, equity investors seem to be assuming maintenance of ‘goldilocks’: low rates & ample liquidity; slow (but steady) growth and low (but positive) inflation.
Who is right? We argued here that most leading indicators have lost their informational value as private sector no longer has any LT visibility, and hence survey-based responses frequently send misleading signals. Given that FICC investors tend to be intensive macro data users, they are highly susceptible to whiplashes of false signals. As long as public sector continues to dominate macro outcomes, FICC investors are at the mercy of unpredictable shifts, driven by CBs rather than fundamental drivers. Therefore, our traditional assumption— that whenever there is a conflict between FICC and equities, the former is almost always right— might no longer hold, as FICC investors are now just as ‘blind’ as equity investors. Hence, equities just might be right.
However, we are concerned on two counts: (a) global economy continues to reside on a de-facto US$ standard and the US is not generating enough US$ to enable continuing global leveraging (absent strong recovery or QE4, supply of US$ is falling at ~5% clip); and (b) efficacy of conventional monetary policies seem to be largely exhausted. As global velocity of money declines, incremental QEs required to grow liquidity are on an ever increasing scale (~US$1.5tr+ in ’16 and escalating to infinity). Hence, there is a need to re-assess nature of QEs.
We doubt that the alternative of CBs abandoning desire to regulate and ‘smooth cycles” and letting deflationary business cycle to reset itself is on the cards.
If conventional QEs lost potency and aggravate global deflationary pressures, why do equities assume that lack of tightening and further QEs would guide economies towards ‘goldilocks’? We believe that it is a simple ‘Pavlovian reflex’. In the past, this relationship worked because QEs were generally successful in temporarily reducing deflationary pressures. However, short of massive rise in monetary stimulus, it seems that incremental changes would no longer be able to achieve such an outcome. Are we ready for more extreme policies? The next stage is likely to be CBs directly funding fiscal spending, investment and consumption. However, to accept such a radical shift requires ‘accidents’ and a severe slowdown. Over 12-18 months, chances of both are high but low over ST.
Hence in the ST (3-6 months) we anticipate neither aggressive QEs (with at best limited efficacy) nor extreme unconventional policies. Therefore, as investors progress into ’16, supply of US$ is likely to continue contracting, deflating global demand and constraining liquidity. This would lead to regular bouts of volatility rather than goldilocks and could easily reverse current equity euphoria.
Hence, we are reluctant to back weaker EMs, and continue to play ‘safe’ by emphasizing countries with trapped local liquidity, some flexibility of monetary & fiscal policies and countries that do not excessively rely on commodities. This continues to tilt us towards India, China, Philippines and Taiwan and away from Indonesia, Malaysia and Thailand. We also continue to emphasize our ‘Quality & Stability’and ‘Sustainable Dividends’ portfolios. When would be the time for our ‘Anti-Quality’ portfolio? Probably sometime later in ’16-17.
Wow imagine how high stawks can go when we go to NIRP 4eva!
Didn't Yellen "the cu**"
said 2 weeks ago that the stock market didn't affect the Fed's decision?
I gues she was immidiately punished by God when she chocked and lost her tongue
-100% would be really nice for the economy
Well Well Well , cock suckers like Obama never learn.
The Fed funds rate has been at zero for the entirety of Obama's disastrous presidency. Let that sink in for a moment.
They are not about to hike in 2016 and leave him to explain why the smoking crater of an economy happened on his watch. Maybe Ol' Yellen would hike if a Republican gets elected, but he/she wouldn't take office until January 2017, so no rate hike in 2016. Bank on it. If another Democrat assumes the throne, we'll have ZIRP (or NIRP) indefinitely.
Wrong. Red team, Blue team, they all practice together when cb's are the topic.
I know medicine, not finance, but...Rates will be raised Q1 of the next Republican presidency, not a day before. Then it will ALL be blamed on him, the Media will go for the ride.