Fed Minutes - Many Favor New Easing "soon"

scott

2:00p
Fed minutes: 'New large-scale' asset buy talk
2:00p
Fed minutes: Discussed Treasury, MBS buys
2:00p
Fed minutes: 'Several' worried about exit from QE3
2:00p
Fed minutes show active discussion of QE3
2:00p
Fed minutes: 'Many' favor action 'fairly soon'
2:00p
Fed minutes: Low-rate pledge tweak discussed

http://www.marketwatch.com/

Bloomberg news:

"Many FOMC participants saw new QE as bolstering US economy."
"Many on FOMC favored easing soon if there was no sustained growth pickup."

I'd love to see them do QE3 - enough chatter about it. Do it (and I'll look forward to discussion of QE4) or don't.

hank

Every day they wait gives them more reason to "hold-off" until after Nov. 6 - Same old word game if you ask me. Anybody's guess what will happen post-election. ... Than again, if Europe tanked again, suppose that would give them a reason to act in a "concerted effort" with European Central Bank to help stave off global catastrophe. In that case, political reaction at home would be swift & intense. Really don't think they want to risk it.

scott

Reply to @hank: At some point the market will call the bluff.

From Bill Gross: "PIMCO ‏@PIMCO
Gross: #Fed minutes make #QE3 and extended period language an 80% probability. Front-end curve friendly."http://twitter.com/PIMCO

http://headlines.ransquawk.com/headlines/pimco-s-gross-says-sees-80-odds-of-qe3-after-fed-minutes-22-08-2012

edited to add - from honorary Fed speaker Hilsenrath: http://headlines.ransquawk.com/headlines/wsj-s-hilsenrath-says-the-fed-sent-its-strongest-signal-yet-that-it-is-prepared-to-take-further-steps-to-bolster-the-us-economy-22-08-2012

hank

Just scattered reports re: Gross's comment from what I can see. Curious whether he put a timeline on his call - before or after Nov 6? ... He's entitled to an opinion. My suspicion is: more often than not those he expresses publicly are intended more to move markets than to enlighten the investing public. (-:

BobC

Whether the Fed initiates a public QE or not, they will continue the purchases they began under operation "twist". Truth to tell, there is very little more they can do to jolt the economy into any real growth. Businesses, large and small, are mostly hesitant to add new jobs, given the uncertainty of tax rates, health insurance costs, increased regulations, and other potential problems. Whether the November election will help to solve these uncertainties is unknown. Until employment numbers improve...a lot...there will be little wage inflation. And that means continued low overall inflation and continued low interest rates. So more of the same old, same old, barring a global political or economic surprise of some kind. And that could be good OR bad. This is the kind of market that, for most investors, is scary to participate in. But, darn it, the market continues to stumble upward.

Old_Joe

Reply to @hank: How cynical of you. Surely the financial wise-men have the interest of the average American near and dear to their every action. I am appalled that you have evidently lost faith in the American System. Be advised that your name will be included on my next undercover report to MJG listing those who have forfeited their right to be considered true-blue (or maybe true-red?) Americans.

scott

Reply to @hank: The Gross comment came from the Pimco twitter. I'd guess if nothing was announced at Jackson Hole, then the next likely possibility would not be until after the 1st of the year.

Additionally, as for Pimco otherwise: "Three of Pimco's portfolio managers, including the head of the commodities group Mihir Worah and Mr. Johnson, have been on a 17-city U.S. tour since June to raise awareness among institutional investors and larger financial advisers.

Their message: the trifecta of loose monetary policy, persistently high levels of sovereign debt and rising commodity prices will drive inflation higher.

Pimco expects currency devaluation to remain a central theme in the market as global liquidity swells thanks to continued easy-money efforts from the world's central banks. Interest rates, meanwhile, will need to stay low as government debt runs at a high proportion to the overall economy.

"Gold is the currency without a printing press," Mr. Johnson says."

http://www.foxbusiness.com/news/2012/08/22/pimco-adds-to-gold-holdings-on-inflation-concerns/

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Lastly, this: "Many FOMC participants saw new QE as bolstering US economy."

...is a delightful example of Einstein's theory of insanity.

hank

Reply to @BobC - All excellent points. Thanks for your seasoned perspective as always.

hank

Reply to @Old_Joe: Reply to @Old_Joe: - Hmm ... to tell the truth, we been spending some quality time in Canada this summer. Roads are in much better shape. Drivers more considerate. Overall - more laid back & tranquil than here. Just few hours from Sault St Marie, MI - Area around Espanola & Manitoulin Island especially nice.

Old_Joe

Hey there Hank-

Just a few weeks ago we spent a week or so up near Vancouver and Victoria... probably our 4th or 5th trip to that area. Back in the 70s we spent three weeks traversing Canada from Nova Scotia to Vancouver via rail, spending several days in Toronto and Halifax, and a week or so in Jasper in the Canadian Rockies. Rented a car in Nova Scotia (got clear out to the end of Cape Breton Island) and Jasper- good highways and good people for sure. What a great trip!

We really hope to visit the Michigan area before we pack it in... lots of friends back there.

Take care!

perpetual_Bull

BobC,

Very true indeed. I will add that during our last financial crisis ( current?) many companies learned to run lean. This has helped corporate profits at the expense of the unemployed,,etc. It could be said that many corporations discovered Dave Ramsey's book ... "Total Money Makeover" .