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Thursday, October 30, 2014

Fed ends QE3 and sends upbeat signals on economy

Interesting timing, Feds end QE3 as republicans gain control of congress. If the economy tanks the democrats will blame republicans and have a campaign issue for the next election. Many believe Obama was brought in to destroy America anyway and his policies have been tailored to the Cloward - Piven strategy to overwhelm the economy with welfare and entitlement spending. 

Food stamp usage has skyrocketed under Obama as has SS disability payments, and unemployment funding. The spending frenzy has been exacerbated by the horde of illegal immigrants welcomed into the country under Obama and the democrats and RINOs.

Published: Oct 29, 2014 4:02 p.m. ET 

Statement draws dovish dissent


A look at the Fed’s bond buying and the stock market. The Federal Reserve on Wednesday voted to end its bond-buying program.

WASHINGTON (MarketWatch) — The Federal Reserve voted on Wednesday to end its bond-buying stimulus program commonly known as QE3 and sent several upbeat signals to markets that it was not worried about global weakness, low inflation or a wobble in financial markets.
In the statement, the Fed left unchanged its pledge that rates would remain near zero for a “considerable time.” But it qualified the statement, saying that if the economy improves faster than expected, than the first rate hike could come sooner than anticipated.
The statement also made a major change to the Fed’s view on labor markets. Instead of seeing “significant underutilization” in the labor market, which was in the September statement, the Fed now said that underutilization in labor resources “is gradually diminishing.”
On inflation, the U.S. central bank dismissed concern with the drop in inflation expectations seen in financial markets. It said that surveys of longer-term inflation expectations have “remained stable.” It said that low inflation has been held down by low energy prices and “the likelihood of inflation running persistently below 2% has diminished somewhat since early this year.”
U.S. stocks SPX, +0.62%  sagged immediately after the statement and closed with mild losses. Read Market Snapshot for more
Before the statement was released, the market was expecting the first rate hike in October 2015, a few months later than the “mid-2015” guidance from key allies of Fed Chairwoman Janet Yellen. After the statement, traders wagered that the Fed would raise rates slightly earlier, at the September meeting.
Ian Shepherdson, chief U.S. economist at Pantheon Macroeconomics, said the Fed statement made was an “incremental shift towards the hawks.” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, added that the statement had a “more positive tone“ than expected.
“We expect tightening will start by June 2015, but, of course, that will depend on the data,” Sullivan said. “For now, there is no urgency for officials to use the statement to signal an imminent move,” he added.
For his part, Shepherson said he was sticking with his forecast of a spring 2015 rate hike. This is sooner than most economists expect.
Carl Tannenbaum, chief economist at Northern Trust Co, said it was important not to overstate the hawkish shift, calling it fairly small. Tannenbaum is forecasting the first rate hike in September 2015.

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