In this week's Off the Cuff podcast, Chris and Mish discuss:
- The FOMC Freak-out
- Why markets dove after the Fed minutes were released
- Stocks Slip, PMs get Slaughtered
- Why the markets look very treacherous from here
- The Sinister Sequestration
- What will likely result if it happens
Ugh – what a week. And it isn't even over yet.
Chris and Mish start by dissecting the Federal Reserve Board's Federal Open Market Committee (FOMC) minutes that roiled the markets once released today. Despite their impact, the minutes didn't reveal all that much besides some internal debate within the Fed whether or not QE should continue at the high levels currently in the plan. The hawkish nature of this questioning surprised the markets, which led to a moderate sell-off in the equity markets, a lift to the US dollar, and (yet another) smackdown in precious metal prices.
As Chris and Mish see it, this is likely little more than posturing, hinting at a power the Fed has but will not use – because it can't. At this point, the Fed is so far into the hole it has dug for itself by force feeding free money into the economy through quantitative easing. There is no plan for unwinding that liquidity without causing massive withdrawal shock. So the Fed can jawbone as loudly as it likes, but the odds of it pursuing a more austere path are close to 0%.
by herewego