Wonder if Fisher cut a deal not to dissent for the hawkish inflation language?
Karim writes:
Decision (no cut) may be hawkish relative to expectations, but wording mostly dovish.
1st paragraph-all changes highlight downside risks to gwth; slowing export gwth a new wrinkle in addition to the usual financial market strains, labor market weakness and housing.
2nd paragraph-identical to prior except mention of inflation expectations has been dropped; so a downgrading of concern over inflation.
3rd paragraph-‘stand ready to act’ but no mention of ‘in a timely manner’.
Fisher dropped his dissent
NEW
Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.
Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.
The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.
OLD
Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.
Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.
Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.
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His prediction – treasuries will offer the ultimate shorting opportunity ever known to mankind in the history of the universe – warren I have another island friend – he lives in tobago – his grandfather was temporary acting emporer of China in the early 1900’s – jay chen – he says all his chinese friends are hoarding hard assets because the US gubbment will not be solvent in the near future – are you gonna short treasury warren? For that matter do you post your personal asset allocations anywhere? I saw on CNBC today that they were very hard on pimco’s gross and vangaurds bond manager about talking their book.
http://wallstreetexaminer.com/?p=3146
The Treasury will need to start pounding the market with supply again as soon as next week, especially if they have to start raising the money for all of the bailouts, backstops, and rescues they are committing to. Given the level of panic into Treasuries, at current levels, I suspect that Treasuries may represent the greatest short selling opportunity in the history of the Universe since the Big Bang. So let’s call this Big Bang II or BBII for short.
the us govt will always be ‘solvent’ in its own currency.
however, the fed is likely to raise rates as they lose their fear of systemic risk which will make the prices of tsy secs fall.
i don’t normally post my positions, which are tiny right now after losing most of my free cash hedging my borrowing costs and having to pony up as rates fell. Over time it works out as my borrowing costs will stay low for the term of my hedge, but near term it’s negative cash flow.
i own a few shares of GE for the yield. it looks dirt cheap to me, but i’m not an equity analyst. I also own a few s and p futures at higher prices. i have about 5% of my assets in equities. I also have a few thousand Lehman shares just for entertainment- seems the liquidation value should be higher than .30 per share, but i’m only guessing.
i’m also long a few rbobs at much higher prices to hedge my personal fuel consumption.
i’m also into the muni bma trade (20×10) to lock in future tax rates and underwater their as well.
i think that’s about it.
“I also have a few thousand Lehman shares just for entertainment- seems the liquidation value should be higher than .30 per share, but i’m only guessing.”
This is an interesting meme, especially coming from you with recent history, several of my trader friends also bought a large wollop of lehman that cheap and told me to do so as well, I said I am not a gambler but an INVESTOR and I sent them to your weblog that if the shareholders of fannie and freddie can get wiped out, why trust that you will get ANYTHING in a bankruptcy and liquidation of lehman – that only a dumb gambler would buy lehman here with the “hope” they would get something when recent history (as noted by you Warren) seems to suggest the powers that be aint helping. I am in shock and dumbfounded you threw even play money at lehman without insider info of their future – that is just crazy! There are nice casino’s close to you in the virgin islands if you want to live like that!
http://stcroixusvi.thebeach.vi/casino.html
When AIG got down to 4 dollars I wanted to buy a big wollop of that, but my broker went down in the last hour of trading and I with that dead time I told myself I can’t be jumping into this stuff even with play money because then I would be doing everything that makes keynes turn over in his grave when he said the fetish of liquidity was the most anti-social of all things. Still the emotion was present inside my mind and even after years of training to be spock – I was dissapointed in myself that I even felt the emotion at all.
I have the majority in passive vanguard bond and stock indexes.
guilty as charged
Warren,
Thanks for posting some of your holdings. As an amateur, I find it really enlightening…especially so that you have so little in equities…fascinating. It would be interesting if some might consider (you among them) to post a trailing summary of their positions, maybe from the last quarter like a mutual fund might, so we could all see how these are doing. For the uneducated it might be a good learning tool.
Rob K.