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August 9 FOMC Meeting Full Minutes: We Came Thiiiiiiis Close To QE3
Highlights from the FOMC minutes:
We came this close to QE3:
- Some participants noted that additional asset purchases could be used to provide more accommodation by lowering longer-term interest rates.
- Others suggested that increasing the average maturity of the System’s portfolio—perhaps by selling securities with relatively short remaining maturities and purchasing securities with relatively long remaining maturities—could have a similar effect onlonger-term interest rates.
- A few participants noted that a reduction in the interest rate paid on excess reserve balances could also be helpful in easingfinancial conditions.
- A few members felt that recent economic developments justified a more substantial move at this meeting, but they were willing to accept the stronger forward guidance as a step in the direction of additional accommodation. Three members dissented because they preferred to retain the forward guidance language employed in the June statement.
Yet this stopped them:
- In contrast, some participants judged that none of the tools available to the Committee would likely do much to promote a faster economic recovery, either because the headwinds that the economy faced would unwind only gradually and that process could not be accelerated with monetary policy or because recent events had significantly lowered the path of potential output. Consequently, these participants thought that providing additional stimulus at this time would risk boosting inflation without providing a significant gain in output or employment.
On "transitory" commodity prices:
- Transitory factors, including supply chain disruptions from the earthquake in Japan and a surge in energy and other commodity prices, had pushed up both headline and core measures of inflation for a time.
- More recently, however, as prices of energy and some commodities have declined from their earlier peaks, headline inflation has moderated.
- Participants generally noted that, with apparently significant slack in labor and product markets, slow wage growth, and little evidence of pricing power among firms, inflation was likely to decline somewhat over time.
On September 21:
- Participants noted that devoting additional time to discussion of the possible costs and benefits of various potential tools would be useful, and they agreed that the September meeting should be extended to two days in order to provide more time.
And why the conclusion at this point is foregone:
- Many participants pointed to the recent downward revision to estimates of economic activity over the past three years, and some to the financial market strains seen during the intermeeting period, as contributing to a downgrade of the outlook for the economy. Moreover, many participants saw increased downside risks to the outlook for economic growth.
- Meeting participants generally noted that overall labor market conditions had deteriorated in recent months.
And on why the dissenters (now minus 1), are about to be trampled:
Messrs. Fisher, Kocherlakota, and Plosser dissented because they would have preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an “extended period,” rather than characterizing that period as “at least through mid-2013.” Mr. Fisher discussed the fragility of the U.S. economy but felt that it was chiefly nonmonetary factors, such as uncertainty about fiscal and regulatory initiatives, that were restraining domestic capital expenditures, job creation, and economic growth. He was concerned both that the Committee did not have enough information to be specific on the time interval over which it expected low rates to be maintained, and that, were it to do so, the Committee risked appearing overly responsive to the recent financial market volatility. Mr. Kocherlakota’s perspective on the policy decision was shaped by his view that in November 2010, the Committee had chosen a level of accommodation that was well calibrated for the condition of the economy. Since November, inflation had risen and unemployment had fallen, and he did not believe that providing more monetary accommodation was the appropriate response to those changes in the economy. Mr. Plosser felt that the reference to 2013 might well be misinterpreted as suggesting that monetary policy was no longer contingent on how the economic outlook evolved. Although financial markets had been volatile and incoming information on growth and employment had been weaker than anticipated, he believed the statement conveyed an excessively negative assessment of the economy and that it was premature to undertake, or be perceived to signal, further policy accommodation. He also judged that the policy step would do little to improve near-term growth prospects, given the ongoing structural adjustments and external challenges faced by the U.S. economy.
The latest Philly Fed update should have put Philly Plosser's doubt to rest.
Bottom line: the Fed knows the economy is contracting, but it needs that final deflationary confirmation to launch QE3. That confirmation will have to come in either the ISM, the NFP, or a 15-20% drop in the S&P.
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Strong dollar bitchez
weak banks and treasury market bitchez
Weiiiiiiimar, bitchez!
Dollah, gold, oil - all up. We don't need no stinking QE.
It's nice to see the Fed will be starting its new currency debasement procedures pretty soon.
Gold to the Moon Alice!
While the focus on QE3 is idiotic in terms of a desire to improve the economy (it hasn't and won't; arguably, it's damaged the economy signifcantly by dampening consumption), I think the assumptions about today's Fed talking points as being dovish are very much off the mark:
"economic recovery" LOL!
"it needs that final deflationary confirmation to launch QE3. That confirmation will have to come in either the ISM, the NFP, or a 15-20% drop in the S&P."
I am not even sure that the 15-20% drop in the S&P is necessary at this point, given that the Fed does not want people to think that they react immediately to market volatility. Just a nicely disastrous ISM and/or NFP would do it at this point. And if either are disastrous, I would not be surprised to see the market rally.
sarcasm on regarding the strong dollar bitchez......bitchez
Would you believe "Chuck Norris with a BB gun?" M. Smart
BTFD bitchez!
They need to hurry the fuck up with the printathon so we get this current monetary regime over with. Bunch of pussies
QE DOES NOT WORK!!! PROVEN!! ARE THERE ANY SANE PEOPLE LEFT IN THE WORLD!?
Is that a trick question?
JUDEN FETZEN IS ALWAYS THE ANSWER TO ZIONISTA BANKSTERS
What do you mean it doesn't work!? my PM holdings have risen dramatically since the QE I!
Of course it works
QE = Rich richer and poor poorer
Neither does fractional-reserve central banking. However, this does not seem to stop them from trying.
The goal for the next 20 odd days is to baffle with bullshit, apparently.
FOMC: Some members thought more stimulus could boost inflation risk
08-30 14:07: FOMC: Some members thought more stimulus could boost inflation risk
FOMC says some participants judged none of the tools available were likely to do much to support the US economic recovery08-30 14:07: FOMC says some participants judged none of the tools available were...
They seem to want to keep a holding pattern until september thus the baffling with bullshit... too bad for retail investors who are in a 'tilt-a-whirl' market. No getting off this rollercoaster, just vomit in front of the monitors.
Of course inflation is transitory when you stop easing, the assets crash. But any qe3 would have ro be at least a trillion to get this market to new highs.
Fuck the poor, they will see even more job losses due to poor economic conditions and higher commodity prices.
Qe2 = Arab spring. Good job guys.
At some point they will give up on the idea of new highs, instead hoping to keep it flat as the gamblers all seek to cash in their chips.
It doesn't work, but they have to do it until their paradigm fails. Fisher is the only one with balls in that group.
QE works. It sends my Gold and Silver Up.. I am begging for QE3.
Good summary, thanks Tyler.
What a fucking waste of time!
No whammies, no whammies... STOP!
LOL
And it's likely that well thought out.
ok. i get it now. data will be awful. but beware QE3 if you want to short this market. so don't even try doing it despite what the data says.
But for the shorters out there, won't we need a serious drop in the s and p before qe 3? I don't buy Tylers take that a bad Nfp will be enough for qe3 unless it is accompanied by a big decline in the markets.
So, I'm still banking on a decline this week or next.
the current plan of just dangling the prospect of more QE seems just as effective as actually announcing a plan. so why bother so long as the market thinks its just around the corner? they can play this game for some time before the market figures the game out.
Maybe, but is the market really this stupid? Can't someone program the machines to know that they won't get a qe3 unless they start selling?
Or is there something else at play here? Maybe they know they can't do qe3 anytime soon, so the idea is just to keep dangling it to keep the markets afloat for a while.
this is imo a normal reaction to the decline in the ES from 8/2 to 8/8...if one were to accept the technical interpretation of the ES from jan through july 2011 as a 7 month h&s that broke on 8/8, then he would expect a roughly (1360-1240=120) point decline before a reaction...ES bounced around (1240-120=1120)...one would then expect a possible retest of the neckline as resistance, most likely followed by the real decline...volume throughout seems to confirm...
of course there are many who would disagree...just an opinion
and here we go
So is this end of month melt up hedges just fluffing or a front run for sept meeting?
...must close greeeeeennnn.....must make bonnuuussseeesssss....:))))
$2,000 gold.... preposterous.
$10,000 gold... not so much.
Markets are doing fine without QE, that is of course taking into account the dollah has to go to zero.
Bottom line: the Fed knows the economy is contracting, but it needs that final deflationary confirmation to launch QE3. That confirmation will have to come in either the ISM, the NFP, or a 15-20% drop in the S&P.
Sounds more to me that commodity prices need to come down more no?
Missed my crack hit by >this< much. Damn you Fed dissenters, damn you to hell.
Don't worry. They're just warming up the pipe for you first. give it time...
This market is way WAY short.. you still might catch a rock wiff or two, to the tune of a hard squeeze.
LOL
And what does all this meaningless gobbly gook (asset purches, accomodation, Systems portfolio, easing financial conditions, stronger forward guidance, etc) mean? Its all just a bunch of stupid elitist asshole bullshit.
They think that the best way to get the real economy going is to print more paper money. That's it!!!!!!
They don't care about the "real economy". Hell, they don't even know what that means.
I don't think from reading the minutes they even know. I mean look at it. They are rattling off symptopms, symptoms of a disease they refuse to acknowledge. It's like knowing the patient has a huge tear in a blood vessle somewhere, but to keep blood pressure up, they keep pumping blood in.
Paging Dr Keynes, Dr Keynes!
as long as the express keeps stopping at 72nd street, I'm not complaining...
Run-up to September 21st, because everyone wants to get in front. IS it that simple? YES! Anything (bad) could happen between now and then, hence, even more QE, so no lose play. Heyyyyyyyyyyyy!
Two days is not sufficient... the Members should convene daily when the market is open. Stick a Bloomberg in front of each and just set the right prices every minute already.
i'm thinking we are going to have a glorious crash in the next 2 weeks. stocks, pm's and oil will be slaughtered to get the printers turned back on.
They certainly do need a catalyst.
Perhaps it's time to pull the plug on the B-Moyn's bad bank?
wrong. after QE3 takes it's first baby steps, we will be flirting with a new all-time high on the DJIA.
So... it looks bad for the future because it now looks bad in the past, back when they said it didn't?
Wow, that bent my brain! (Don't try this at home folks, it's dangerous!)
Recession Bitchez!
I'm so over seeing "bitchez".
It sounds like Sack and Frost are about to get another workout.
Sack has been training at the gym for his F5 key entries for the last 3 months.
I hear he has an index finger to die for.
point and click and
buy buy buy
point and click and
F4, F4, and F4 some more
Correction,
Log-in, open JD's Mark-To-Mars modeling.
Get on phone, JPM Ask, noted....wait for it...on the board.
point, click, select "Market", "GTC"
Click.
F5, F5, F5.
how about a nice little algo?:
if: market down
then: buy
market up y/n?
if: n
then: repeat
if: y
then: end
Be at Newark in 45, flight #1679. Ensure the jump drive is safely stowed in a cavity.
Initial Gold Reaction is to shoot higher:
http://www.oilbull.com/gold-chart/
wtf are you talking about? Gold spkied at 645 CST in the AM. Reaction to the fed in gold and silver has been almost as muted as equities.
Yeah, sorry. I was looking at the minute chart (which was spiking) and thought I was looking at the hourly.
Can I claim that this morning's spike was early front-running on a leak and that my statement was therefore still accurate?
:-)
So worst consumer confidence since the lows of the recession, we rally right back. I guess the Dow will shoot up nfp prints neg. Number,
Stimulus Interruptus!
Wow, that was close....good thing the Bernake pulled out in time, a Ben and Timmy love child would get beaten like a red headed step child....
au contraire,
stimulus non abortus est
Who is Brian Sack?
Helicopter pilot.
Nice...
Buy the rumor, sell the news. Worked so far.
Oh shit, it isn't transitory?!? They should start reading ZH, they could get the news early.
I'm guessing transitory to the fed = oh shit that's bad, we have no idea what to do, so lets hope it gets better.
I'm going with Thomas Donlan (Editor of Barron's) who is guessing that QE3 ia already surrepticiously underway. It makes sense to me.
With all of .gov spending and HUGE Treasury bond sales yet low interest rates, what else could explain recent events (stocks going up, etc.)?
So, whether QE3 is here or just about here, looks (again) like GOLD is the best place to preserve your wealth.
Gold moving up as the DJI and SP move up. I think there is no faith in those to moving higher.
I fought the Fed and the Fed won. Bernacke said talking was a tool the Fed could use. He has now put a safety net below the market. if data is bad he acts if good keep rates low. Only worry is inflation which either noone cares or if you buy real estate or commodities is great. If you use or consume commodities your fucked.
Missed it by that much.
The greatest nation in the world cannot remove the training wheels. More of the same - how proud the teleprompter must be.
if you're long or short the markets, the huge intraday moves guarantees your stops will be taken out! it's so you cannot even leave your monitor for a second! i'll just pee right here!
You don't already have a monitor in your bathroom? That way, I can run to the head, barely miss a tick. Scares the dog when I jump and run though......
http://www.youtube.com/watch?v=ffjBxA-cnbM
Air pilots have gotcha covered!
QE3 is a lock.
Without deflation even moderating inflation means we are stuck paying more forever. With wages going the opposite way it appears the only path to income growth is the stock market. hey tried housing as the only path to wealth generation and look how that played out.
What kind of country do you have when there is no incentive to work but to just put your money in the stock market and watch it double every year.
It is amazing that what the MSM says about the stock market is exactly what they said about housing. It can't go down, even if it does drop it is just a small correction before going higher, your investment will double every few years, it isn't high risk if everyone is playing the game.
An average American says, man gas went back up to $3.85 and I don't know if I can afford to drive to work.
A Wall Street vampire says, man gas went back up to $3.85 and I am going to make a killing on my freighter of oil I've been storing for the past two years.
What is bad for main street is good for Wall Street as long as the government backstops the market and provides welfare for the new dependence class to purchase goods. The SNAP card has been the biggest boon for grocery stores in the history of this counry. If they were bad for business they wouldn't accept them. The truth is an unemployed family on SNAP will spend far more than a working family. An unemployed family will seek more healthcare than a family that has to pay for it. Katrina showed that a disaster benefits Best Buy more than Home Depot since more FEMA cards were used for flat screen TVs than screen doors.
"Without deflation even moderating inflation means we are stuck paying more forever"
If by 'forever' you mean till we die, yes.
SnP 500::
http://markettechnicals-jonak.blogspot.com/
Despite the extended upcoming meeting, does anyone suspect a pre-announcement???? I wouldn't put it passed them.
You coulda bet the farm on QE3 when QE2 expired.
You know what's really interesting and telling is that these dozen or less people determine the fate of trillions of dollars of market reaction and they spend less than 24 hours to "make" such decisions. Now, they are going to spend 2 days to do so in September? WTF? "Forward guidance language" Are they priests or banksters?!?
Is there a difference? I guess "they" are not the only ones involved in forming the decision.
"Are they priests or banksters?!?"
>implying there's a difference
$1.5 Trillion in chronic yearly deficits is gonna take a lot of money printing, no matter how much they 'fret' they don't want to. So shut up and start printing already.
Too dang bad the fed cain't print factories.
Or piss crude oil
What makes these useless assholes think we need them? They could stay home for the rest of their terms & who would give a shit?
Free markets my ass. Socialism.
GOT QE?
Apparently Madoff is in prison only because he chose to run his Ponzi independently...
Had he formed a commitee of regional ponzi-point-persons... he just MIGHT have gotten away with it.
A serious question if I may.
I know the dollar (like all currencies) is a fiat currency. But, I'm assuming that there is at least some relationship between the value of the assets on the Fed's balance sheet and the value of the dollar. Otherwise, why hold any assets at all.
If the Fed increases the duration of the assets, they are increasing the risk to the balance sheet.
It seems to me there is not much room for rates to go down (especially if you need to keep the banking model of borrow short - lend long profitable).
If so, then the additional risk is to the downside of the balance sheet, not the upside.
So if rates rise at some point for whatever reason, then the value of the balance sheet would fall.
So the dollar would weaken as a result.
Presumably, if rates rise, the dollar normally would strengthen, but that would be offset by the signifiant decline in Fed asset values. And the longer the duration of those assets, the greater the negative impact.
Is that off-base? I have seen no discussion of this aspect of operation twist.
How low do these wipes want interest rates to go..... ????? Do they actually think that moving the 30year from .00001 to .000005 will make a bit of difference in the economy ? Cut the shit. These dinks should all be fired and made to go clean toilets. The money they make toiling over these ridiculous decisions and posturing adds nothing to the real economy.
Bens been predicting that we'll beging to see a modest recovery
2008
2009
2010
2011
2012
A broken clock is right a least twice a day.......
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