First, we learn that The Fed “accidentally” released the minutes of the FOMC meeting to several Congressional offices and others, numbering about 100, yesterday.
We were not immediately told this, but the market “inexplicably” ramped on heavy volume at about 12:15 CT yesterday — right when the so-called “accidental” release happened.
When a legitimate company accidentally does this they immediately release their earnings to everyone so as to limit the damage. The Fed, on the other hand, held off on this action and disclosure for more than 18 hours.
Number of indictments I expect to see for this? Zero.
Amount made by those who traded on this inside information? Who knows, but I bet it’s not zero.
Real business expenditures on equipment and software appeared to slow somewhat early this year after rising at a brisk rate in the fourth quarter.
Yeah, like Alcoa for example…
Broad equity price indexes increased over the intermeeting period, bolstered by favorable incoming economic data. Option-implied volatility for the S&P 500 index over the near term rose slightly but remained low, at levels last seen in early 2007.
What came next?
Many participants reported that their business contacts were seeing some further improvement in the economic outlook. Firms reported increased planning for capital expenditures, supported by low interest rates and substantial cash holdings. Investment spending on productivity-enhancing technology was strong, as was pipeline construction in the energy sector. A few participants indicated that their contacts saw the level of uncertainty about the economic outlook as having declined recently, a development that could lead to increased investment expenditures.
Of course the NFIB says that an effective zero percent of small businesses think it’s a good time to hire people. That makes lots of sense in this context…. right?
Inference about the labor force participation rate was complicated by its long-run downward trend.
Yeah, long-term there. Well, ok, since 2008/09. That looks like a step-function (twice!) to me, both driven by Fed policy.
A few participants noted that they already viewed the costs as likely outweighing the benefits and so would like to bring the program to a close relatively soon. A few others saw the risks as increasing fairly quickly with the size of the Federal Reserve’s balance sheet and judged that the pace of purchases would likely need to be reduced before long.
And these “few” individuals were?
Members generally continued to anticipate that, with longer-term inflation expectations stable and slack in resource utilization remaining, inflation over the medium term would likely run at or below the Committee’s 2 percent objective.
Yet another black-letter declaration of lawless behavior — the objective set in law is stable prices, not those rising at 2% a year.
Congress, for its part, continues to fiddle.
We’re in trouble folks.