Federal Reserve Minutes: ‘We’re confused.’ So is Wall Street

Washington’s “Happy Days” recovery narrative has begun to fall apart. So has this stock market, and even the Fed is confused about what comes next and when.

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Federal Reserve Building.
Marriner S. Eccles Federal Reserve Building, Washington, D.C. (Via Wikipedia entry on Federal Reserve)

WASHINGTON, April 8, 2015 – April’s markets seem to be experiencing the same kind of déjà vu all over again that Bill Murray ran into in his classic movie comedy, “Groundhog Day.” Since April 1, stocks and bonds have been playing April Fool’s jokes on investors again and again and again.

It’s not surprising, then, that most investors, including many seasoned pros, are absolutely baffled by this market, not to mention similar issues in materials, commodities, currencies, precious metals, oil and gas… You name it. Everyone is confused. And it turns out the Federal Reserve’s Federal Open Market Committee (FOMC) is in the same boat.

According to a report today on CNBC, the FOMC “agreed that ‘an increase in the target range for the federal funds rate remained unlikely at the April FOMC meeting but that language in the Fed’s guidance provided the FOMC with the flexibility to begin raising the target range for the federal funds rate in June or at a subsequent meeting.” Language immediately after, though, pointed out that some members believe a rate increase might not be warranted until 2016.

In other words, the mighty Federal Reserve has no clue what to do. It would help if Congress would do something itself to help them along these lines, as former Chair Ben Bernanke begged them to do for years. But Harry Reid still controls the Senate by refusing to allow Republicans to govern, using his minority of committed anti-American leftists to block anything useful that’s initiated by the GOP.


So, the Fed is still out there on its own, as it has been since January 2009, when the disastrous rule of Barack Obama and his hard left supporters set out to destroy the United States as we know it. (Some people still don’t have a clue.)

Earlier this year, markets began to tank, fearing that with interest rate increases imminent if the Fed were really serious about getting back to normalcy, all stocks would immediately go to hell. Likewise, bonds. For legitimate, traditional reasons, sure, but also just because.

But then, Washington’s economic narrative began to fall apart. The euro swooned into an astonishing collapse pattern vs. the dollar as the Eurobank zigged to less-than-zero interest rates while the U.S. dollar strengthened because its zero interest rate environment was allegedly about to end.

The resulting rapid dollar appreciation exacerbated the already collapsing price of oil, since it now took less rapidly appreciating dollars to buy more oil on the open market. Following?

Meanwhile, back in Washington, anyone who could read between the lines of federal government propaganda knew that that rapidly dropping unemployment rate and dramatically strengthening economy narrative was an outright falsehood even if the media refused to report this fact.

Job creation continued to be anemic, and consumers were using their price-at-the-pump windfall to pay down debt in today’s dollars, unlike big banks and their 1 percent owners who were bailed out by the taxpayers. No breaks for the middle class here.

Truth is, as we’ve been writing in this column, everything you read about the government and the Fed these days is all smoke and mirrors, meant to support a fantasy narrative that things are improving all over. They are for Jamie Dimon and Warren Buffett. But for thee and me, hardly ever. Everyone in Washington now seems to be following the Marxist playbook: If you lie about something loud enough and long enough, everyone thinks it’s the truth.

But maybe the oligarchs and the elites have piped this happy tune one too many times without results, and maybe the promises are wearing thin, making the Fed’s attempt to trick the economy into recovering via its failing power of moral suasion to fall flat as they attempt a transition into a normal economic situation.

Regarding the Fed’s apparent confusion as outlined in today’s newly released FOMC minutes, one investment guru was happy to provide his opinion to CNBC:

“‘This dichotomy speaks to the division on the board; they, as a whole, simply aren’t sure what they’re supposed to be doing right now given the divergent messages from any number of places,’ Dan Greenhaus, chief strategist at BTIG, said in a note.”

It would seem that “April Fool!” is still Washington’s message to us and to the financial world. It’s a hell of a way to run the country. We still need a lot more “Joe the Plumbers” in this town.

Today’s trading tips

Again, our ideas are a little sparse here. Markets are moving one way and then another, with most sectors moving in lockstep. This is why so many investors today are sticking with general or sector ETFs and have given up on picking individual stocks to hold. Markets are being manipulated to follow the happy but false Washington narrative, and logic is gone with the wind.

Markets are moving sideways in what appears to be a sinuous, long-lived correction, fearing to go up but still not wanting to go down. It’s a tricky environment in which to make serious investment commitments.

We’re holding our own, aiming to hold at least 30, perhaps 50 percent of our portfolios in cash, awaiting what we think might be a more severe correction sometime relatively soon. Meanwhile, we are holding the short term bonds we have left, along with our non-perpetual preferred stocks (the ones that will get called in roughly five years or less), REITs and a few other random positions.

But we’re not really buying anything until we can read the tea leaves. And alas, today is not one of those days. So we’ll stay on the sidelines for now until it looks like someone is going to win the argument. Maybe you should do the same, but that decision is up to you.

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  • Daniel

    To be clear, the author is a music editor by trade. His investment advice offered in the article is so far off base…not to mention that if he truly believes that the system is rigged to benefit Jamie Dimon and Warren Buffet then why not advise clients to invest in their companies and participate in the gains. Bottom line, pullbacks are fine and normal and part of the cycle. Don’t spend too much time getting worried about what a music writer says about the markets.

  • To be clear, classical art and music is Terry’s passion; Investing is his trade. You may not agree with him, or consider his information to be valid, you can post a differing opinion even, but you don’t have to be nasty about it. And his reviews and knowledge of classical art and literature are vast. Isn’t it wonderful he has the ability to appreciate life’s beauty.

    • Chris Barrett

      Well put, Jacquie! Thanks for sticking up for this EXCELLENT author.

  • Shara Bingham Mills

    Anybody that understands language and success can put together that this is was written by a loser looking for attention.

  • Gary Fleshman

    Wow! For anyone that says the media is responsible and unbiased and adheres to journalistic ethics, look no further than this article to disprove them. “So, the Fed is still out there on its own, as it has been since January 2009, when the disastrous rule of Barack Obama and his hard left supporters set out to destroy the United States as we know it. (Some people still don’t have a clue.)” . This article could NOT be more biased and journalistically unethical if it tried. This is NOT NEWS, it’s an OPINION or EDITORIAL piece. Granted, I loathe and detest our current leadership and government representatives ON BOTH SIDES right now, but this article is a blatant violation of journalistic ethics and responsibility. It’s no wonder that our sociopolitical environment had become so dysfunctional and has de-evolved into complete and utter disaster…dysfunctional is a gross understatement. Do you people really believe this garbage? Are the masses really so stupid as to think that this type of information is actually “news”…apparently so. How can the American public make well-informed and rational decisions about the issues confronting them in their daily lives with this type of journalistic malfeasance? They cannot…the editorial board of this media outlet needs to be hung by their genitals in public and put up for ridicule! I don’t have a problem with the content…everyone has a inalienable right to speak freely…and I strongly encourage it. However when it is offered as “News” instead of what it really is OPINION…then I have a massive problem with it. Wether you agree with it or not is not the issue ( we need a variety of opinions ), it’s wether this media outlet has any integrity or ethics in the performance of their job…obviously they DO NOT! So keep on reading journalistic fecal matter like this piece, and we’re really in trouble. Wake up people…we’re being incontrovertibly manipulated and coerced by these so-called “Journalists”! You’re being LIED to!

    • Gary Fleshman

      This article could NOT be more biased and journalistically unethical if it tried. This is NOT NEWS, it’s an OPINION or EDITORIAL piece. Granted, I loathe and detest our current leadership and government representatives ON BOTH SIDES right now, but this article is a blatant violation of journalistic ethics and responsibility. It’s no wonder that our sociopolitical environment had become so dysfunctional and has de-evolved into complete and utter disaster…dysfunctional is a gross understatement. Do you people really believe this garbage? Are the masses really so stupid as to think that this type of information is actually “news”…apparently so. How can the American public make well-informed and rational decisions about the issues confronting them in their daily lives with this type of journalistic malfeasance? They cannot…the editorial board of this media outlet needs to be hung by their genitals in public and put up for ridicule! I don’t have a problem with the content…everyone has a inalienable right to speak freely…and I strongly encourage it. However when it is offered as “News” instead of what it really is OPINION…then I have a massive problem with it. Wether you agree with it or not is not the issue ( we need a variety of opinions ), it’s wether this media outlet has any integrity or ethics in the performance of their job…obviously they DO NOT! So keep on reading journalistic fecal matter like this piece, and we’re really in trouble. Wake up people…we’re being incontrovertibly manipulated and coerced by these so-called “Journalists”! You’re being LIED to!

    • Gary Fleshman

      (Rest of comment has been deleted for being a rant)…Censorship…alive and well. I was calling out this media outlet for blatant and obvious violations of Journalistic ethics…so they censor my comments. We’re be manipulated and lied to by the mass-media, and when someone calls them out on their journalistic malfeasance they censor me…you just proved my point for me. Reposted my initial full comment all over social media!

  • Ran_d

    Numbness from near free money for so long its produced Numbness. It has done Nothing to resolve the economic dilemma.

    The solution to the economy is End Free money to the Big Institutions, and its continuous buying into empty Stocks of business’s who have stopped Producing and Selling, and are only gaining income from free money driving their Stock prices up, Void of Value.

    At the same time Lower credit card interest to the dead middle class, at the same time as those Rich Stock Market business’s must begin a Hiring Spree, and End the Unemployment.

    Doing these 3 things at the same time is the Only thing that will Create an Economy Everyone can share in. Anything else is a pending disaster! Period.

    Good luck with anything so simple. Especially in a world where the name of the game is screwing it up as badly as possibly can be done !

  • Pale Ryder

    To pay off its egregious debt, the US government would have to pay out a billion dollars – over 17,000 times.

  • Tom Ahs

    Even with Federal debt over $17 trillion, $509,840 is being wasted on a study that will send text messages to drug addicts in homo lingo.