They will be released tomorrow. This is my summary and analysis of the Oct 25th meeting minutes. I will post a summary and analysis of the new minutes and compare them to the previous minutes, looking for any significant changes in the language that could signal some longer term trends for the $.
Summary and Analysis of the October 25th Meeting
1. The decision to hold the rate @ 5.25 was 10-1, with Lacker dissenting
2. All meeting participants expressed concern about the outlook for inflation. Most participants expected core inflation to edge lower, but they were quite uncertain as to the likely pace and extent of that moderation. Core inflation was anticipated to edge down in 2007 and 2008 relative to the second half of this year because of the diminishing impetus from the prices of energy and other commodities and because of the modest easing in resource utilization.
3. Participants noted that housing activity was likely to remain a substantial drag on economic growth over the next few quarters. Weakness in the housing market and the associated downshift in house price appreciation did not seem to be spilling over into consumer spending, which appeared to have grown at a steady pace in recent months.
4. Participants continued to expect the economy to expand at a rate close to or a little below the economy's long-run sustainable pace over coming quarters. Looking ahead, a gradual reduction in the restraining effects of the contraction in residential investment and further solid gains in consumer and business spending were expected to lead to a pickup in GDP growth through 2007 and into 2008. Real GDP was expected to rise at a somewhat slower rate over the next two years than in 2006.
5. The possibility that the tightness of the labor market could lead to a sustained increase in wage pressure was viewed by participants as an upside risk to costs and their expectations of a gradual decline in inflation. It was noted, though, that continuing high profit margins provided some scope for increased labor costs to be absorbed without necessarily leading to elevated price pressures.
6. In their discussion of the economic situation and outlook, meeting participants noted that incoming data over the relatively brief intermeeting period had come in broadly as anticipated.
Analysis:
Let's review the major points: Inflation expected to moderate though risks remain, GDP picking up and expected to remain at or near the long term sustainable pace, labor market tightness not leading to wage inflation, the housing downturn not expected to effect consumer spending and data coming in broadly as expected. That last part is especially interesting, because the Fed is noting that their assesment of the future of the economy is correct.
This economy is pretty close to a "sweet-spot" from a Fed point of view. Not too hot, not too cold, just about right. To be known from this point on as the "Goldilocks Economy". It's my definate belief that if things stay as they appear to be, the Fed will remain on hold and is very likely to remain on hold at least thru the first 1/2 of 2007, barring any unforseen major economic or geo-political effects.
Summary and Analysis of the October 25th Meeting
1. The decision to hold the rate @ 5.25 was 10-1, with Lacker dissenting
2. All meeting participants expressed concern about the outlook for inflation. Most participants expected core inflation to edge lower, but they were quite uncertain as to the likely pace and extent of that moderation. Core inflation was anticipated to edge down in 2007 and 2008 relative to the second half of this year because of the diminishing impetus from the prices of energy and other commodities and because of the modest easing in resource utilization.
3. Participants noted that housing activity was likely to remain a substantial drag on economic growth over the next few quarters. Weakness in the housing market and the associated downshift in house price appreciation did not seem to be spilling over into consumer spending, which appeared to have grown at a steady pace in recent months.
4. Participants continued to expect the economy to expand at a rate close to or a little below the economy's long-run sustainable pace over coming quarters. Looking ahead, a gradual reduction in the restraining effects of the contraction in residential investment and further solid gains in consumer and business spending were expected to lead to a pickup in GDP growth through 2007 and into 2008. Real GDP was expected to rise at a somewhat slower rate over the next two years than in 2006.
5. The possibility that the tightness of the labor market could lead to a sustained increase in wage pressure was viewed by participants as an upside risk to costs and their expectations of a gradual decline in inflation. It was noted, though, that continuing high profit margins provided some scope for increased labor costs to be absorbed without necessarily leading to elevated price pressures.
6. In their discussion of the economic situation and outlook, meeting participants noted that incoming data over the relatively brief intermeeting period had come in broadly as anticipated.
Analysis:
Let's review the major points: Inflation expected to moderate though risks remain, GDP picking up and expected to remain at or near the long term sustainable pace, labor market tightness not leading to wage inflation, the housing downturn not expected to effect consumer spending and data coming in broadly as expected. That last part is especially interesting, because the Fed is noting that their assesment of the future of the economy is correct.
This economy is pretty close to a "sweet-spot" from a Fed point of view. Not too hot, not too cold, just about right. To be known from this point on as the "Goldilocks Economy". It's my definate belief that if things stay as they appear to be, the Fed will remain on hold and is very likely to remain on hold at least thru the first 1/2 of 2007, barring any unforseen major economic or geo-political effects.
I think there would be a replacement item of close to the same price under the tree.
Question for you is: When trading, do you enter your trades after the first res has been crossed with sl behind pivot or 1st sup? I have been making constant winning trades trading retracements, but now have thought about trading the big move, but not sure where to enter? was thinking to enter after first res passed,with stop behind 1st sup no good? would appreciate your input. later
