April 10 - The latest Fed meeting minutes show the Fed is clearly thinking about an exit strategy from their bond buying stimulus- but given the weak jobs data released after the meeting, the timing of an exit will likely be pushed back. Bobbi Rebell reports.
If they knew then what they know now- it most likely would have been a very different Fed meeting. Minutes from the March Federal Open Market Committee meeting- which were released 5 hours early Wednesday after an accidental email went out to trade organizations- reveal a few policymakers were pushing to taper off their aggressive bond buying by mid year- and end them later this year- because from the looks of it- the economy was showing strong improvement. That was before the surprisingly bad jobs report that came out last Friday- which put the strength of the recovery in doubt. But while the time table has most likely been extended- the search for an exit strategy is real. Loomis Sayles Vice Chairman Dan Fuss: SOUNDBITE: DAN FUSS, VICE CHAIRMAN, LOOMIS SAYLES & CO (ENGLISH) SAYING: "They don't want to withdraw support when the economy still needs it. On the other hand let's face it these are very, very artificially low rates. Signs of inflation that will be hard to contain are already there." The fact that there was a deliberate discussion about when to start ratcheting back the monetary support for the U.S. economy was a relief for Brian Jacobsen, Chief Portfolio Strategist at Wells Fargo Funds Management. SOUNDBITE: BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST, WELLS FARGO FUNDS MANAGEMENT (ENGLISH) SAYING: "The Fed isn't just going out there and setting things on cruise control as they are going to expand their purchases on their balance sheet, so that its QE infinity or whatever. That is actually a very deliberate attempt to try and support the financial markets and for them to do their part to support the economy. And it's recognizing that there is not much more they can do to support the overall economy." The minutes also said the extremely low interest rates have not led to excessive risk taking- as investors reach for yield. The fear is that that kind of investor could create asset bubbles in certain markets. That gives the Fed more justification to continue its support- a move that will benefit investors: SOUNDBITE: BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST, WELLS FARGO FUNDS MANAGEMENT (ENGLISH) SAYING: "They want to see substantial improvement in the labor market and we haven't seen that substantial improvement yet so they are going to continue to provide this liquidity which means that riskier assets probably should continue to perform well and interest rates across the board should stay low for at least the balance of this year. The markets took the minutes in stride- with the S&P 500 hitting new all time highs.