Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
The minutes from the September 17-18 Federal Reserve Open Market
Committee (FOMC) meeting were released this afternoon, offering a
glimpse behind the mind's eye of our American central bankers.
This is how we heard it.
Most Fed officials saw QE tapering this year and ending mid-2014
We thought we were going to be a lot further along by now; this is
going to take a lot longer than expected.
The FOMC saw "moderate" expansion; slower than anticipated.
We injected an obscene amount of liquidity into the system, but
there is no velocity of money.
The Fed saw risk from "sizable increases in interest rates."
We have to figure out a way to generate growth without an attendant
rise in interest rates.
The FOMC forecast a "gradual abatement" of headwinds slowing
Time heals all wounds; besides, our faces are getting used to the
The FOMC saw labor market improvement since September 2012.
There are signs of life if you know where to look!
The FOMC saw "significant risks" to economy including fiscal drag.
Did you hear what they said over on The Hill?
A number of FOMC participants saw rising fiscal policy risk.
And did you hear what
said in response?
FOMC participants forecast inflation increasing in the coming year.
: Hey, remember that sound bite about the labor market improvement
since September 2012? Let's leave out the part about wage growth
not keeping pace with inflation.
Several FOMC participants saw financial conditions as tighter
Holy Moses -- more than 4 trillion bucks and conditions are getting
So, what does it all mean? Nothing... and everything. Lemme
It means nothing because everyone is focused on the soap opera that
is Washington, DC. As the world waits with bated breath for any
sign that the debt ceiling will be pushed, which is the most likely
path, that's all that matters, at least for now. In the meantime,
the markets will wade through this process of price discovery.
It means everything because the Federal Reserve is knee-deep in
financial engineering and if you listen closely, there is
dissension -- if not confusion -- in the ranks. They're psyched
that the focus in on our dysfunctional government; it gives them
every excuse to not taper until Janet Yellen settles into her seat.