The FOMC minutes were released earlier, and in our opinion, there was no surprise. The Committee recognized slowing economic growth, slow recovery in employment, slight improvement in housing, and basically everything else that we have been talking about.
It also thinks it will have inflation under control with a 2% ceiling. We disagree, especially as the Israel and Iran war gibberish continues.
Most members favor monetary easing, if necessary. This does not guarantee a QE, especially in September. However, the release was worded nicely to keep the hopes of a QE alive.
Basically, we need to continue to wait until at least the September meeting. We still do not expect a QE, especially given the slightly better economic numbers (not necessarily good) released in recent weeks. We also note that the market has gone up more than 2% since the FOMC meeting in late July and early August. Many say that the Fed does not weigh the equity market's performance heavily when making a decision; we disagree. Again, a QE is already priced in and chances of an actual one (not a verbal or psychological one) before end of 2012 are declining. Of course, the S&P 500 turned positive after the release of FOMC minutes.
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