Yesterday the Fed came out and spoke about the economy, and then hinted on that they would possibly end QE stimulus by the end of 2013. I guess they started to look at the big picture and realized that artificially supporting the markets and their good ole’ boy bank friends wasn’t such a good idea after all, and in the near future would do more harm then good to the overall economy and free market system. The only problem now is that the economy and the markets are so geeked up on printed money that when they do exit investors may stumble on finding true valuations for many companies and volatility will return back to the markets on an economy with an already weak foundation. All in all it looks like the fed is starting to worry about stimulus side effects. Read the full story below.
Stock Market News – Fed Runs Out Of Stimulus Ammo..
Unbias Stock Market News -
Federal Reserve officials are increasingly concerned about the potential risks of the U.S. central bank’s asset purchases on financial markets, even if they look set to continue an open-ended stimulus program for now.
In a surprise to Wall Street, minutes from the Fed’s December policy meeting, published on Thursday, showed a growing reticence about further increases in the central bank’s $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009.
“Several (officials) thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet,” the minutes said, referring to the narrower group of voting Fed members.
Investors picked up on the report’s hawkish tone, with stock prices drifting lower after the announcement, while the U.S. dollar extended gains against the euro. Yields on the 30-year Treasury bond hit 3.12 percent, their highest levels since May.
“The minutes of the Federal Reserve’s December monetary policy meeting revealed a somewhat surprising level of concern among the ranks of central bankers regarding the long-term impact of the bank’s asset purchase program, or quantitative easing,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C.
Still, the Fed appeared likely to continue buying assets for the foreseeable future, having announced in December it was extending monthly purchases of $40 billion in mortgage securities and also buying $45 billion in Treasuries each month.
A few of the voting members on the central bank’s policy-setting Federal Open Market Committee thought asset buying would be warranted until about the end of 2013. A few others highlighted the need for further large-scale stimulus but did not specify an amount or time frame.
Fed officials generally agreed that the labour market outlook was not likely to improve without further nudging from the monetary authorities.
QE “HEEBIE-JEEBIES”
The U.S. economy expanded a respectable 3.1 percent in the third quarter on an annualized basis, but growth is believed to have slowed sharply to barely above 1.0 percent in the last three months of the year.
Data on Thursday showed a solid gain of 215,000 new private sector jobs for December, while analysts polled by Reuters last week were looking for a rise of 150,000 new jobs in the Labor Department’s official survey, due out on Friday.
Still, the minutes indicated worries about quantitative easing policies were spreading beyond the usual regional Fed hawks who, like Richmond Fed President Jeffrey Lacker, have opposed additional Fed easing.
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