collector's item
According to the Fed, which changed its tune from “exceptionally low levels for the federal funds rate for an extended period” to “exceptionally low levels for the federal funds rate at least through mid-2013.” From the Fed’s statement:
The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.
Three governors preferred to keep it vague.
Markets are unimpressed, as no QE3/2.1/e was announced, interest rates didn’t go negative, and the extended period language didn’t include the balance sheet. On the other hand, CNBC found it necessary to break out the decabox, which they noted is a collector’s item “you can frame” (earlier example framed above).
Treasuries are rallying as apparently some people thought an extended period didn’t mean that extended. Goldman, on the other hand, was with the Fed on the 2013 thing and thinks they could even go a bit further, saying in a note this morning:
Our new forecasts reinforce our long-held call for no funds rate hikes until 2013, and suggest that it could be even later. Indeed, our Taylor rule suggests that it could be as long as late 2014 before the first funds rate hike becomes appropriate–around 18 months later than before. This prediction is close to that from a rule estimated by Glenn Rudebusch of the San Francisco Fed (see “The Fed’s Exit Strategy for Monetary Policy,” FRBSF Economic Letter, 2010-18). Feeding our new forecasts into his rule suggests that the first rate hike might take place in mid-2014.
So if you're not supposed to trust anything that bleeds for 3 days and doesn't die, what do you do when it lasts 2 years?
[insert menstruation joke here]
I'd do it myself but seeing I'm pmco, it'd be too bloody easy.
ugliest gang gang bang ever
Matt your tags need work. This aggression will not stand…
http://www.youtube.com/watch?v=gEmJ-VWPDM4
If rates keep this low for this long, there won't be a banking system (traditional deposit gathering and making loans) because every bank will have died at that point. With these rates you can't make money on deposits and consumer's and small business are still de-leveraging which means they don't want credit. The funny thing is low interest rates are doing more harm then good at this point. Keep this up and deposit fees will be on the horizon for not just those with 50 large in cash, but every individual depositor in the country.
Considering Goldman wirtes the Fed's statements I'm not surprised
If you take QE2 and experience a recession lasting longer than 2 years you should consult your regular economist.
Screen shot taken from new game show called "Name the Asian"
I would leave this to Matt. Thanks for playing.
I can't believe I looked but I see what you did there.
What's Jon Stewart doing there?
I stopped reading at 'Matt Levine'
wow. this article is actually under 1500 words!
Just noticed that no one has "liked" article to fb yet. That might be that way for an extended duration.
Forgive me. Let me wise crack for a moment. I will note that the deca box is a complete sausage fest except for Melissa Lee in the middle. A bunch of old guys hanging around a hot Asian with a young(ish) dude look on, its afternoon at the Wynn pool.
The decabox is the sign of the devil.
Are red wings spicy?
When did they make a gameshow out of my favorite movie?
-J. Gundlach
All political theater. What can the Fed do, nothing but stay the course and stay out of it. Economics 101
so uncertainsy right now