Another FOMC Week

Not much happening today, which isn't surprising given that all of the action is slated for Wednesday.

So, Monday's over and Tuesday awaits. But the real action will come on Wednesday with the conclusion of the latest FOMC meeting. We'll get the usual "Fedlines" summary that will be issued shortly thereafter as well as the "press conference" hosted by The Bernank himself.

Everything will focus upon the Fed's plan to "taper" QE. Will they taper? Maybe they won't taper? If they do taper, how much will they taper? Blah, blah, blah, blah, blah.

If you wan't to to read about this nonsense again, please click this link from last Tuesday. It pretty well sums up where I stand. https://www.tfmetalsreport.com/blog/4774/taper-talk

To the extent that The Fed temporarily has wiggle room to taper, much of that line of thinking was tied to the misplaced assumption that someway, somehow the U.S. federal deficit for fiscal 2013 was going to come in much lower than originally thought.

(Remember: QE∞ is entirely about funding the ongoing deficit spending of the U.S. government. In the absence of any buyers {https://www.zerohedge.com/news/2013-06-14/treasury-sales-foreigners-hit-record-high-april}, The Fed must purchase nearly all of the ongoing Treasury issuance. QE is $85B/month which equals just north of $1T over 12 months. If the 2013 deficit was going to be just $600B, then the Fed could possibly "taper" back to $50B/month.)

However, there is no way, no how that the 2013 federal deficit is going to come in at $600B. With four months to go in fiscal 2013, the current deficit already stands at $626.3 billion. Hmmm. I guess in order for the deficit to come in at $642B as the CBO had forecast a few months back, the government is going to run at a break even pace until the end of September. The likelihood of that is "slim to none and Slim just left town."

More likely is that the 2013 deficit will come in very close to the original projection of near $1T. Why? After a recording their usual, tax revenue inducing-surplus in April, the monthly deficit for May came in at $139B (for May alone!), the highest deficit for the month of May since 2009. (https://www.zerohedge.com/news/2013-06-12/government-celebrates-austerity-fourth-largest-spending-month-ever)

Again, that $139B in deficit pending for May took the total for FY2012 up to $626B. If the U.S. just averages $100B/month in deficit spending for the next four months, we'll blow right through $1T again on our way toward $1.1T or even $1.2T.

With a deficit at $1T+, The Bernank no longer has any leverage at all and will be unable to "taper". Period. End of story. In fact, glossed over in the minutes of the late April FOMC meeting was this:

"The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes."

Obviously, I've added the emphasis in the sentence above but, clearly, it's worth noting. That "The Committee is prepared to increase or reduce" was new language, inserted just this past month. Yet no one seemed to care. All anyone wanted to discuss was the "taper".

Well, taper-schmaper, I say! Again, no way, no how. It's far more likely that the monthly QE figure will increase to $100B before it would be reduced to $60B. Watch the deficit numbers. They'll tell you all you need to know.

Similarly, watch these charts this week. They, too, will tell you all you need to know. Price will either break out and UP are down and out. We'll see...

Just a couple of more things...

I've had two, separate interviews over the past 24 hours. First, I was on with Kerry Lutz earlier today:

https://financialsurvivalnetwork.com/2013/06/turd-ferguson-get-prepared-now-the-convertible-yuan-is-coming/

I was also on with Dr. Janda yesterday:

https://www.davejanda.com/guests/turd-ferguson/sunday-june-16-2013

And Santa asked me if I would help him to promote his next three CIGA meetings. Of course I'm happy to oblige. I just wish that I was able to attend one of them but I can't make any of them. However, you should do everything in your power to make it to one. Every previous session has been met with rave reviews and I'm sure that each of these next three will be equally valuable.

The sessions will be in Chicago on July 8, Vancouver on July 10 (maybe that weasel, Christian, will show up?) and Scottsdale on July 12. You can read all about them and sign up here: https://www.jsmineset.com/2013/06/13/chicago-vancouver-and-scottsdale-qa-sessions-announced/

OK, that's all for today. I need to get to the gym in order to work off some stress. More tomorrow as we prepare for a volatile mid-week.

TF

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Key Economic Events Week of 3/25

3/25 8:25 ET Goon Bostic
3/25 9:05 ET Goon Ghoulsbee
3/25 10:00 ET New Home Sales
3/25 10:30 ET Goon Cook
3/26 8:30 ET Durable Goods
3/26 9:00 ET Case-Shiller home prices
3/26 10:00 ET Consumer Confidence
3/28 8:30 ET Q4 GDP final guess
3/28 9:45 ET Chicago PMI
3/28 10:00 ET Pending home sales
3/28 10:00 ET UMich final
3/29 8:30 ET PCE and Core PCE
3/29 8:30 ET Personal Inc and Spend
3/29 11:30 ET Chief Goon Powell

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