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Fed Whisperer Confirms December Liftoff Still A Go, But Flight Path Won't Be Steep
The FOMC went with an ultra-dovish "clean relent" in September, and shifted the reaction function to include international financial markets in what was presumably an effort to avoid sparking an EM meltdown. Confusion reigned.
Then, in October, they decided that was probably a communication error and so they switched gears and leaned hawkish in the statement.
What's now become clear is that this is all ad hoc. There's no consistency to the message, there's no continuity, and these decisions are being made on a meeting-to-meeting basis based on who knows what.
Fortunately, there's one man who, like Ben Bernanke, has the "courage" to cut through the fog and explain the unexplainable. That man is Jon Hilsenrath, and his take on the October Fed minutes is presented below.
Via WSJ
Federal Reserve officials meeting last month anticipated it “could well be” time to raise short-term interest rates at a December policy meeting after keeping them pinned near zero for seven years.
Fed officials thus decided to change the wording of their Oct. 28 policy statement to ensure their options were open for a move in December, according to minutes of the October meeting released Wednesday with the regular three-week lag.
“Most participants anticipated that, based on their assessment of the current economic situation and their outlook for economic activity, the labor market, and inflation, these conditions could well be met by the time of the next meeting,” the minutes said.
Since the gathering, economic data have generally supported the Fed’s view that the job market is improving and offered some evidence wage and inflation pressures are slowly and gradually starting to build. The Labor Department early this month reported the U.S. unemployment rate dropped to 5% in October and hiring accelerated after slowing in August and September. Wages picked up and the Labor Department’s consumer price index, released this week, also showed inflation outside of the food and energy sector firmed in October.
Fed officials next meet Dec. 15-16. Futures markets are pricing in an increased probability of a quarter-percentage-point increase in rates at that meeting.
The minutes said “some” Fed officials felt in October it was already time to raise rates. “Some others” believed the economy wasn’t ready. The wording meant that minorities on both sides of the Fed’s rate debate are pulling in different directions, with a large center inside the central bank was inclined to move.
The Fed added a reference in its October statement to the December meeting as potential liftoff date.
“Members saw the updated language as leaving policy options open for the next meeting,” the minutes said.
Officials cited a number of reasons to avoid delay: They risked creating uncertainty in financial markets by holding off; they risked allowing financial market excesses to build due to low rates; they risked signaling a lack of confidence in the economy if they didn’t move rates higher; they would be ignoring cumulative gains in the economy already registered. The jobless rate, for example, has dropped in half from a peak of 10% after the financial crisis.
At the same time, the Fed minutes included several new signals that after the Fed does move rates higher, the subsequent path of rate increases is likely to be exceptionally shallow and gradual.
Before discussions in the two-day gathering turned to the economy and rate decision, Fed staff presented an analysis of the likely outlook for short-term interest rates in the years ahead. The equilibrium real interest rate—meaning the interest rate, adjusted for inflation, consistent with low and steady unemployment—has been near zero of late, the staff concluded. It will gradually rise as the economy strengthens, but not much. Low productivity growth and an aging population are putting downward pressure on growth and rates that could persist, the staff concluded.
Fed officials largely agreed, concluding the Fed’s target fed funds rate “would likely be lower than was the case in previous decades,” the minutes said.
“Participants generally agreed that it would probably be appropriate to remove policy accommodation gradually,” the minutes said of a subsequent discussion about the near-run rate outlook. “It was noted that beginning the normalization process relatively soon would make it more likely that the policy trajectory after liftoff could be shallow.”
Beyond near-term planning on rates, discussions at the Fed turned to an ominous longer-run outlook. With rates already low and not likely to move up much, the Fed’s target interest rate could return to near zero in the years ahead if the economy is hit by some new shock or recession.
“Some participants noted that it would be prudent to have additional policy tools that could be used in such situations,” the minutes said.
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So...we should expect the opposite?
Exactly. Fed whisperer my ass.
The Federal Reserve should be relocated to Raqqa. PERMANENTLY!
How long would it take for their policies to destroy ISIS? ;-)
Looney
<-- Market Condition bad, No Rate Hiking
<-- Weather is bad, no Rate Hiking
Funny, just saw a banner ad above saying buy shares of single family homes.
I guess someone is dumping?
The reason they won't raise rates is the exact same reason why they haven't done so yet.
Boris is compose Limrick on Twitter:
http://twitter.com/BorisAlatovkrap
Fed again is make chatter
Market condition is not matter
Rate is not rise
No big surprise
Bankster is only get fat because that is essence of all action of federal reserve and protectionist agenda on behalf of bankster family of Rothschild, Loeb, Kuhn, and Rockerfeller
knew it!
Boris is Limerick King
There was a Fed govnor named Janet
Got rate cramps when trying to plan it.
To everyone's surprise
She *let* the rates rise
Just a little, it is Janet's planet.
Please raise those rates Auntie Janet.
There is no better way to have planned it
When Derviatives implode
Nuclear Bombs will explode
We go to Hell in a holocaust, God damn it.
ther will NEVER be a another Fed rate hike!
There will however be more money printing.
Rate hike in December? There goes Christmas.
There once was a girl named Jill, who tried a dynamite stick for a thrill. They found her vagina in North Carolina, and bits of her tits in Brazil.
But Fed Chairsatan is Janet, is not Jill...?
Boris, Crazy Americans do not know how to write. So I guess the meaning was Lost in translation...
Let's see if I can get this right...
There once was a Chairsatan named Janet,
Who shoved a dynamite stick in but she jammed it.
They found her vagina in North Carolina
and bits of her tits in Willamette
Any better?
Who run Bartertown ?
Pigs run Bartertown.
No pigs, no shit, no energy, NO BARTERTOWN. .
Wouldn't work because ISIS has already established an impenetrable defense against Fed weapons of financial destruction: gold coinage.
If you want to know what's NOT going to happen, just ask Gartman the day before. It's a lock!
Exactly. Fed whisperer my ass.
To your point "Exactly"!
It won't matter if they "raise it" or go "negative" because the insurmountable damage was done 7 years ago, and we've done nothing to fix it since!
There's no tellin' with Yellin,
If she'es alive with intellin,
Or, just dead and smellin'
You might consider a market event triggered by terrorist events giving the Fed cover to back off from the hike without losing face. But hey, I'm just speculating.
Pronouncement of Central Bank is no more than fiat dictate of future market condition. This is sure sign of degrading psychosis confusing what you are want to happen ignore what is actual happen, like Barry approach to "bend curve" of healthcare expensive.
Fear of terrorist attack will explain the terrible holiday season shopping . . . and weather too.
As for Barry, I truly wonder what he wants.
Reggie
You should expect a 2bp raise in the rate. That both accomplishes bringing credibility to the Fed (they did raise rates) and not kill off free money to the banks.
This was before Paris... Will they want to introduce even more uncertainty so soon?
What uncertainty? You think TPTB didn't know what was going to happen and what's going to happen until the end of the year?
I'll take "never" for $800 billion, Alex
That's $4 Trillion Alex
Please construct all answers in the form of a question.
Great summary, especially since he only has 5 minutes to write it during the embargo!
Have we had a lost decade or two yet?
I think we're turning Japanese I think we're turning Japanese I really think so.
easily....were at 1 lost year so far, flat 12 months rolling.....last two bear mkts gave up 2 yrs of advances in 6 months.
2150 in Dec 2015.....goes to 1850, not even a Bear mkt!....however a mere 30% off 2150 takes us way back to 2000....lost Century!
Active will win, passive will lose and at least one generation of 'savers' will shun the market for 20 more years. -40%, +25%, -33%, +60%....just look at the nikkei....no buy and hold there
Lately I've decided that the Fed will do whatever the dumbest possible move is.
I think that means they raise rates and then lower them again in under a quarter. They'll rationalize it as showing the markets that they can raise rates, but that the economy still needs stimulus.
Externally everyone will see it as the Fed slipping further into insanity.
^^^^^^^ this...moar insanity.
Yup. But I don't think it will be total insanity; they may wait until the BRICS system is fully operational to pull it. Also, this just happened while we were watching Paris:
http://www.alt-market.com/msm/2740-imf-gives-initial-approval-for-china-...
hilarity ensues... good job hilsenrat!
John Hell - Sin - Rat
would be fucking great the day (if it every comes) that they go to raise rates 25 bps and the yield on the US10-year goes lower cuz theres so much demand for higher yields ... fed will have their WTF moment
1913 monkey Federal Reserve ensues.
Creepy Monkey Circus - YouTube
The Swiss population will be the first in the world to vote on their banking and monetary system
http://positivemoney.org/2015/11/swiss-citizens-initiative-collects-1050...
If ISIS is gonna hit the US, I can think of a lot of worse targets than the next Fed Get toether.
I don't believe a word that these bloody con artists tell the public.The politicians need to outlaw the Fed and let Treasury handle things.
im sure they were in search of a better life
Breaking News: Honduras detains five Syrians traveling on stolen Greek passports who were headed toward the United States: police Reuters
They forgot to mention the other "flight path"...
The ONLY one that will matter that will be positioned 180 degrees south which includes more ISIS Paris-like attacks elsewhere in Western Europe and thousands of NATO troops stationed in Eastern Europe with lots and lots of ordnance after "trident juncture" which will be used to squeeze the other end of the tube of toothpaste in order to compensate as the U.S., Israel, France and UK continue to have their clocks cleaned in Syria...
Then it won't really matter if the Fed raises it 1/100 of 1% or 100% because the ultimate "diversion" will be in place!
A message to the Russian Federation...
I like my skin deep black after a detonation... so black in fact it will look like "pitch"... That is if I'm not close enough to the hypocenter to have my innards scattered in all 4 directions into the next 3 states which would be my first choice!
SUNE halted - blackstone talk
Whisperer?......lmfao!
Now the Fed has its own version of Deep Throat.
This is just too funny.
Whisperer?......lmfao!
Now the Fed has its own version of Deep Throat.
This is just too funny.
Yellen dog whistle.
/sarc
"the Fed’s target interest rate could return to near zero in the years ahead if the economy is hit by some new shock or recession.
“Some participants noted that it would be prudent to have additional policy tools that could be used in such situations,” the minutes said."
NIRP is coming early next year, very early.
I think they will rase by .0000000000000001
Who Cares!
California needs better border security!
Pronto!
eom
The Fed will NOT raise rates in December or anytime this year. They can't.
Here is your rate hike launch in a nutshell: https://www.youtube.com/watch?v=hSJ2kcDirEo
Median household income per state, when sdjusted for CoL:
https://mises.org/blog/california-and-new-york-are-poorer-you-think
Fed whisperer confirms the Fed has been covertly buying stocks through their primary dealer banks.
WDF cares?
Just imagine how much time has been wasted over the past 4 years spewing the same shit over and over by you me and the talking clowns that make a living being wrong the majority of the time.
At some point even Hilsenrath will just cut and paste previous articles in the future to explain what the FED is thinking.
2000 words and nothing of any real value. Let me simplify things Jon. Some want to raise (not really), some dont (11 of 12) and all know, that anything remotely close to "normalization" (shallow flight path .125% at a time, maybe twice) is impossible.
20 trillion in debt says so. A strong dollar crushing multinational corporations says so. An oil industry that will be absolutely crushed by $30-40 oil (Canada, the ME, Brazil, Russia and the US) says so, and a housing market that will be devastated by 5-6% 30 years says so. Its impossible to ever raise rates to previous norms. Only four ways out.
1 Complete meltdown of current system "restructuring" US and world debt. Haircuts for everyone.
2 QE 4ever debasement of money to catch up with debt, which really hasn't been working to well (see Japan 26 years and counting).
3 All debt paid of with public (federal, state lands), welcome to "Goldman's / JP Morgan's Yellowstone park."
4 Higher taxes, which at this point would absolutely bring on number one, followed by number two, followed by number three.
We can warp your mind back in the 1980's.
The Lord Is A Monkey Butthole Surfers - YouTube
Why does anyone actually listen to these fucking retards anymore? Why do we let them farm us with fake paper bullshit money. Power over us is ALL they want, and they'll print enough of it to satisfy their needs. If WE, THE PEOPLE, quit using thier scam ponzi system, and trade amongst ourselves, these central planning retards would starve to death because they are only capable of darkness.
I admit, I of course use the money, for now anyway. I am starting to barter more with things and at least trying to convince people of the truth. If you don't press real hard with the group of people you are around, it does work OK, but most people need to unplug slowly. That's at least what I try anyway.
God bless.
Whatever happened to the proposed legislation to audit the Fed?
Before he left, Ron Paul got a partial audit through. It was found that 14 trillion USD was created and transferred to the central banks of Europe, and JP Morgan.
USD soaring again, probably another 5% in it.....yellen acknowledges there is 'slack' in labor mkt....fed, the past 20 yrs likes to be behind the curve.....earnings are coming in and are crap and will continue to be crap....we'll have black friday and cyber monday numbers before they meet again.......no increase
last two cycles they raised LATE, basically at the end of the cycle so as to push down faltering economy that much quicker....they are no longer counter-cyclical, she is counter-counter-cyclical , adding fuel to the fire in BOTH directions!!
the $ rise as of late has already been a tightening globally, 25 bps will be double tightening..... lets run up to new highs in to thanksgiving (as usual) flounder about in december then IF she raises on 12/16 it will be a 'sell the news' with mkts droppping to flat/mixed on the year and setting up the new bear mkt (cuz you know its gonna SNOW too!)
Jenner Caitlyn's penis will be going up faster than these rates, and that means more fraud, more inflated stocks and gold taking a dive.
But the only thing still guarded by machine guns, is worthless gold.
The Fed makes a transparent play to regain some credibility after their "John Roberts" episode at the last meeting.
Too late now and they are simply tightening the box they are in.
These Draghi-like comments are designed to create the desired effect without actually instituting the policy, but nobody believes them now. Even the algos have crossed them off the play list.
Which means that they will be confronted by the need to either go through with it in December or to face further erosion in their ability to jawbone events by backing off and sacrificing even more of their false aura of financial mastery.
These are scared, silly academics in a desperate situation and faced with the need to take a riverboat gamblers chance in order to win. Lee at Chancellorsville, they ain't.
Why has the Fed not been fully audited since Ike? Because the maggots in congress are corrupt. Their betrayal has a worse stench than Hillary's XXXL panties, and brother, those are enough to render a guy deaf, dumb, blind and incontinent.
LOL. No way in Hades rates are raised. 100% possibility of "future" rate increase though.
"...they risked allowing financial market excesses to build due to low rates."
They're at least 3 years to late on this one.
So we’ve got all the usual suspects out there calling for a rate rise, Yeah, do it, please do it, please do it. These imbeci**s obviously don’t know sh** from cl*y. Do we have to put up with this crap for another month? NO WE DO NOT HAVE TO. We need to tell them (“THEM”) to “DO IT” no more “DATA SIGNALS”. The last time the markets gave the FED data signals the ass fell out of the markets and they S*** themselves.
If the FED raises interest rates it will strengthen the already strong DOLLAR and strangle your exports, thus contracting your economy and sending it into a DEPRESSION. The U.S. has wonderful numbers, What is the score now, About 60% on food stamps, (whatever that is). Sounds like a socialist utopia HEH, HEH, HEH. In Australia it is called the New Start Allowance. We in AUSTRALIA call it the No Start Allowance because it is just a way to hide the true unemployed and give them a subsistence allowance and keep violence off the streets. My sympathies to all of you in the U.S.A. who believed in the “DREAM” of home ownership and independence.
To anyone who would like to get out of this PONZI scheme there must be a precious metals store nearby.
There is a choice of keeping your life’s labour in airy fairy paper (“PET PAPER”) in which most of the thieves have told you they want to steal (through inflation) at least 2% of your wealth from you.
– If there is deflation you get to keep most of your work (value), If there is the thieves inflation, they get to skim the 2% or whatever off the top, DO NOT FORGET THAT “THEY” CAN TURN ON THE SPIGGOTS TO 10% OR 20% OR WHATEVER and just steal that amount of your life’s work from you.
Or you can convert your excess labour into HARD OBJECTS,
LAND, (can be taxed),
BUILDINGS, (can be taxed),
CARS, (can be taxed and subject to depreciated value),
ART OBJECTS, (subject to personal preferences),
BUSINESSES, (usually valued in (“PET PAPER”) and subject to the honesty of management, ETC.) YEAH, RIGHT. We know all about that don’t we?
Getting back to the difference between “PET ROCKS” and “PET PAPER” and now – wait for it – “PET DIGITALS”. I nearly p****d myself when I heard you can give up your life’s work to (invest) in “PET DIGITALS” HEH, HEH, HEH. _YEAH RIGHT.
Give me a break. Do you think I’m a complete F*** W***.
As far as investing in “PET ROCKS” or “PET PAPER” or “PET DIGITALS”, maybe you should ask the _Indians, Chinese, Russians, Germans (sorry you can have your GOLD back in ??? years) _because I am not licensed to give investment advice.
Best to you all _JOHNLGALT
No way they'll raise rates and let the fed take the blame. They are going to have their bullshit, US-funded group ISIS do some false flag terror in the US, maybe a cyber attack, something, the market will tank, blame the mooslims for the rate hike.
You watch, the terrorists will be scapegoat for this coming market crash, like 9/11. I have a feeling this time will sting a lot more though.