(This is an excerpt from an article I originally published on Seeking Alpha on August 26, 2013. Click here to read the entire piece.)
The release of the minutes for the Federal Reserve’s last policy meeting caused a lot of churn in financial markets, especially in currencies. I read contradicting headlines with one interpreting the minutes as confirming the Fed will taper in September and another headline insisting that there remains much disagreement about the timing of tapering. Given the headline churn, I decided to read these minutes for myself. I concluded that it is not safe to conclude we learned anything new about the Fed’s timeline for tapering. Various comments cmoing out the Jackson Hole confab further confirmed bthis conclusion.
Steve Liesman from CNBC interviewed several Fed presidents on the issue of tapering. {snip}
The bottom-line remains we just have to see what happens. In the meantime, the references in the minutes on the housing market really caught my eye. Here are the related passages from the minutes and my editorial and commentary:
{snip}
To me, this statement was one of the most intriguing of all the statements in the minutes. I am guessing one on-going frustration within the Federal Reserve is that accomodative policy seems to have been quite effective in goosing stock prices higher and perhaps finally getting the housing market moving, but very little to none of these impacts seems to be making a material difference in the lives of average Americans and average families. At the very least, the financial impact has been very imbalanced. Without the “trickle out” effect from higher stock prices and higher home prices, the Fed looses an important transmission mechanism for monetary policy. In the process, the Fed likely only helps to further exacerbate growing income (wealth) disparities in the country.
The overall message from the minutes for the housing market is that the Fed collectively is wary and watching closely. {snip}
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on August 26, 2013. Click here to read the entire piece.)
Full disclosure: no positions