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Janet Yellen’s Full Press Conference Transcript
Much has been said about Yellen’s less than stellar first press conference so we will let her own words do most of the talking. First, from the transcript of her prepared remarks and the following Q&A, here are some highlights.
First, the word count:
- Market(s): 35
- Economy: 25
- Weather: 7
- Inflation: 58
- Deflation: 1
The word cloud:
Goldman’s take of the press conference (as opposed to the statement which we summarized earlier):
BOTTOM LINE: Chair Yellen’s first post-meeting press conference came across as slightly more hawkish than expected.
MAIN POINTS:
1. When asked how to interpret the new guidance that the fed funds rate would remain in the current 0 to 25 basis point range for a “considerable time after the asset purchase program ends,” Chair Yellen stated that “the language in the statement … probably means something on the order of six months.” Assuming tapering continues at a pace of $10bn per meeting, this suggests rate hikes could begin as early as mid-2015.
2. Asked how to explain the hawkish shift in the “dots,” Yellen stated that “the labor market more broadly I think has improved a little more than we might have expected,” but went on to say that “I think that one should not look to the dot plot so to speak as the primary way in which the committee wants to or is speaking about policy to the public at large.”
3. Explaining the statement that the fed funds rate may remain at a below-normal level even as employment and inflation approach “mandate-consistent levels,” Yellen mainly appealed to persistent headwinds from the financial crisis, and did not explicitly mention optimal control considerations as she has in the past.
4. Regarding distortions from the weather, she stated that “it’s an important factor. It’s not the only factor,” in explaining the weaker data. She showed a refreshing amount of candor by noting that “we probably overdid the optimism in January, so in some sense our views have moved around here a little bit.”
5. Asked about wage inflation, she said that 3-4% annual gains in wages would be more normal, in her view, consistent with the average rate of wage increase seen in the last business cycle expansion. She described current wage inflation as “running at 2%.”
6. She was somewhat dismissive of recent arguments that the short-term unemployment rate is a more important measure of slack for wage and price inflation than the headline unemployment rate. Specifically, she said that “I think it would be tremendously premature to adopt any notion that says that that is an accurate read, on either how inflation is determined or what constitutes slack in the labor market.”
And while the punchline was already noted, namely the “6 month” statement:
So, the language that we use in this statement is considerable, period. So, I — I, you know, this is the kind of term it’s hard to define, but, you know, it probably means something on the order of around six months or that type of thing. But, you know, it depends — what the statement is saying is it depends what conditions are like.
… which incidentally said nothing that the statement didn’t already note, namley that if the tapering ends in the fall the first hike would be in mid-2015, or precisely as the “dots” suggested it would, she did have several other notable observations, some of which are highlighted below.
And the full transcript (pdf)
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All Cars Are Under Investigation, LAPD Tells Court
In the course of seeking data
about the Los Angeles Police Department’s automatic license plate
reader program, the Electronic Frontier Foundation (EFF) and the
American Civil Liberties Union (ACLU) asked the police for some
information. Specifically, what plates cameras had captured over
the course of two years, and the department’s policies for using
and retaining what those cameras nabbed. We can’t tell you, the
cops replied, because every car we see is under investigation,
which makes it a (sshhhh) secret.
Every car. Over two years.
Specifically, in their court filing (a hearing is scheduled for
March 21), LAPD
mouthpieces wrote:
Government Code section 6254 sets forth numerous categories of
records that are exempt from the disclosure requirements of the
[California Public Records Act]. One of those categories, found in
subdivision (f), exempts law enforcement investigatory records from
disclosure….The ALPR data sought in this case—electronic records consisting
of vehicles’ license plates, and the date, time and location those
license plates were captured by the Department’s ALPR
cameras—constitute “records of…investigations conducted by …
any local police agency” which fall squarely under this statutory
exemption.
Just so there’s no misunderstanding, the filing added, “All ALPR
data is investigatory—regardless of whether a license plate scan
results in an immediate ‘hit’ because, for instance, the vehicle
may be stolen, the subject of an ‘Amber Alert,’ or operated by an
individual with an outstanding arrest warrant.”
“May?” Well, yes, any car that drives by a camera “may” be a lot
of things. “May” opens up a fascinating world of speculation, full
of intriguing possibilities. But, as the EFF’s Jennifer Lynch
wrote:
This argument is completely counter to our criminal justice
system, in which we assume law enforcement will not conduct an
investigation unless there are some indicia of criminal activity.
In fact, the Fourth Amendment was added to the U.S. Constitution
exactly to prevent law enforcement from conducting mass,
suspicionless investigations under “general warrants” that targeted
no specific person or place and never expired.
The LAPD also said revealing the license plates it had tracked
would threaten drivers’ privacy. Unlike, apparently, tracking them
to begin with.
The full filing is below.
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Rand Paul Attacks Obama on NSA Spying: “Martin Luther King was spied upon, civil rights leaders were spied upon”
Sen. Rand Paul (R-Ky.) is speaking to
students and faculty today at the University of California at
Berkeley, famously known as one of the most left-wing campuses in
the country. And as Jeremy W. Peters of The New York Times
reports, Paul hopes to use that liberal climate to his advantage,
effectively attacking President Obama from what we might call the
libertarian-left over the issue of NSA spying on American citizens.
Peters writes:
Senator Rand Paul, Republican of Kentucky, says President Obama
should be particularly wary of domestic spying, given the
government’s history of eavesdropping on civil rights leaders such
as the Rev. Dr. Martin Luther King, Jr.“The first African-American president ought to be a little more
conscious of the fact of what has happened with the abuses of
domestic spying,” Mr. Paul said, previewing remarks he planned to
deliver to a group of students and faculty members Wednesday
afternoon at the University of California, Berkeley.“Martin Luther King was spied upon, civil rights leaders were
spied upon, Muhammad Ali was spied upon, antiwar protesters were
spied upon,” he said. “The possibility for abuse in this is
incredible. So I don’t care if there’s never been any evidence of
abuse with the N.S.A., they should not be collecting the data.”
Read the rest
here.
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Serfs Up – Average Healthcare Premiums Have Soared 39%-56% Post Obamacare
Submitted by Mike Krieger of Liberty Blitzkrieg blog,
It’s been a couple months since I last updated readers on the epic disaster that is Obamacare. In case you need a refresher, here is the last article I published on the law: Computer Security Expert Claims he Hacked the ObamaCare Website in 4 Minutes.
Moving along, we now have some details on the average premium increase for non-Obamacare health plans following the implementation of the law, and the results are not pretty. According to a cost report from eHealthInsurance, premiums have increased by between 39%-56%.
More from The Washington Examiner:
Americans buying health insurance outside the new Obamacare exchanges are being forced to swallow premiums up to 56 percent higher than before the health law took effect because insurers have jumped the cost to cover all the added features of the new Affordable Care Act.
According to a cost report from eHealthInsurance, a nationwide online private insurance exchange, families are paying an average of $663 a month and singles $274 a month, far more than before Obamacare kicked in. What’s more, to save money, most buyers are choosing the lowest level of coverage, the so-called “bronze” plans.
In California, for example, some families are paying a high of $2,604 a month and in New York, $1,845.
His firm’s price index also gives an average age for singles buying plans, and the results are worrying for insurers and the Obama administration. That’s because the average age is 36, older than the administration had hoped for.
The demographic issue is a huge ticking time bomb, something I previously highlighted in my piece: Humana Warns of “‘Adverse ObamaCare Enrollment Mix.”
Moving along, while we are well aware of the financial disaster Obamacare represents for those not participating, what about those who are in (or at least think they are in) the program?
Let’s look at the story of one Las Vegas man who paid his Obamacare premiums since November yet remains uncovered and now has a $407,000 hospital bill nobody is covering.
From the Review Journal:
The hospital bills are hitting Larry Basich’s mailbox.
That would be OK if Basich had health insurance. But he doesn’t.
Thing is, he should be covered. Basich, 62, bought a plan through the state’s Nevada Health Link insurance exchange in the fall. He’s been paying monthly premiums since November.
Yet the Las Vegan is stranded in a no-man’s-land where no carrier claims him, and his tab is mounting: Basich owes $407,000 for care received in January and February, when his policy was supposed to be in effect. Instead, he’s covered only for March and beyond.
Basich has begged for weeks for help from the exchange and its contractor, Xerox. But Basich’s insurance broker said Xerox seems more interested in lawyering up and covering its hide than in working out Basich’s problems. Nor is Basich the only client facing plan-selection errors through the exchange, she added.
Weeks ticked by, but Basich received nothing to confirm he had insurance. Nevada Health Link kept telling him he was enrolled, but UnitedHealthcare said he wasn’t in their system.
Basich’s predicament went critical on Dec. 31, when he had a heart attack. His treatment, which included a triple bypass on Jan. 3, resulted in $407,000 in medical bills in January and February that no insurer is covering.
Though Basich’s problem is exceptional for its dollar value, his situation is not unusual, Burch said. She estimates that of nearly 200 Branch Benefits Consultants client sign ups via Nevada Health Link, only 5 percent have gone through problem-free. More than 20 customers have the same plan-selection issue as Basich. One gave up trying to fix it and is sticking with the plan the exchange put her in.
Serfs up suckers!
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BUSTED – U.S. Tech Giants Knew of NSA Spying Says Agency’s Senior Lawyer
This is why I’ve been so confused and frustrated by the repeated reports of the behavior of the US government. When our engineers work tirelessly to improve security, we imagine we’re protecting you against criminals, not our own government.
The US government should be the champion for the internet, not a threat. They need to be much more transparent about what they’re doing, or otherwise people will believe the worst.
I’ve called President Obama to express my frustration over the damage the government is creating for all of our future. Unfortunately, it seems like it will take a very long time for true full reform.
So it’s up to us — all of us — to build the internet we want. Together, we can build a space that is greater and a more important part of the world than anything we have today, but is also safe and secure. I‘m committed to seeing this happen, and you can count on Facebook to do our part.
– Facebook CEO, Mark Zuckerberg in a post last week
Last week, Mark Zuckerberg made headlines by posting about how he called President Barack Obama to express outrage and shock about the government’s spying activities. Of course, anyone familiar with Facebook and what is going on generally between private tech behemoths and U.S. intelligence agencies knew right away that his statement was one gigantic heap of stinking bullshit. Well now we have the proof.
Earlier today, the senior lawyer for the NSA made it completely clear that U.S. tech companies were fully aware of all the spying going on, including the PRISM program (on that note read my recent post: The Most Evil and Disturbing NSA Spy Practices To-Date Have Just Been Revealed).
So stop the acting all of you Silicon Valley CEOs. We know you are fully on board with extraordinary violations of your fellow citizens’ civil liberties. We know full well that you have been too cowardly to stand up for the values this country was founded on. We know you and your companies are compromised. Stop pretending, stop bullshitting. You’ve done enough harm.
From The Guardian:
The senior lawyer for the National Security Agency stated unequivocally on Wednesday that US technology companies were fully aware of the surveillance agency’s widespread collection of data, contradicting month of angry denials from the firms.
Rajesh De, the NSA general counsel, said all communications content and associated metadata harvested by the NSA under a 2008 surveillance law occurred with the knowledge of the companies – both for the internet collection program known as Prism and for the so-called “upstream” collection of communications moving across the internet.
Asked during at a Wednesday hearing of the US government’s institutional privacy watchdog if collection under the law, known as Section 702 or the Fisa Amendments Act, occurred with the “full knowledge and assistance of any company from which information is obtained,” De replied: “Yes.”
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Ukraine Pulling Troops from Crimea, Homeless Man ‘Baked’ to Death in Prison, Rand Paul May Run for Re-Election and President at Same Time: P.M. Links
Ukraine is now planning to
pull
its troops from Crimea as Russian forces start taking over
military installations there.- A mentally ill homeless man was arrested for trespassing in
Harlem while looking for a place to sleep, locked up in Rikers
Island, and then subsequently
died in his cell because malfunctioning equipment caused it to
be heated up to more than 100 degrees, officials say. - One of the spouses in Illinois’
first legally recognized same-sex marriages has died at age 65.
Her failing health had convinced a judge to expedite a marriage
license for the couple before the official start date. - Kentucky legislators have passed a bill that would allow
politicians to
run for two offices at once, which would allow Sen. Rand Paul
to run for president while still trying to hang on to his Senate
seat. - The FBI is officially joining the probe investigating missing
Malaysian Airlines Flight 370, helping analyze hard drives
seized from the pilots’ homes. - A federal judge has ruled that Kansas and Arizona can add
state-specific instructions
requiring proof of citizenship to a national voter registration
form.
Follow us on Facebook
and Twitter,
and don’t forget to sign
up for Reason’s daily updates for more
content.
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J.D. Tuccille: Why Flounder Over Ukraine When We Can Be Frustrated by Venezuela?
Tensions escalate as a soldier is fatally shot in
the head during a clash with protesters. Government forces seize a
hotly contested public square long occupied by demonstrators, only
to see opponents of the regime return in reconstituted form. The
country’s economy teeters on the edge of collapse under the weight
of deep corruption and profoundly intrusive state policies. And the
nation’s posturing, yet elected, leader points to a powerful
foreign government as the source of his regime’s problems of
legitimacy and basic competence.
Welcome to…Ukraine? No, this is closer to home: Venezuela
under the rule of President Nicolas Maduro, a leader every bit as
thuggish as his predecessor, Hugo Chavez, but with even less charm.
With Venezuela in our own hemisphere, asks J.D. Tuccille, why
venture to the fringes of Europe to find a heartbreakingly divided
and failing nation that defies easy solutions by Americans?
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Market In Shock By Yellen’s First FOMC Appearance
Concerns about Fed "over-optimism" admissions and shortening the time from taper to rate-hike sparked a major algo-surging risk-off dump in US equities… but that 1% dip was bought with hands and feet as reassuring figures emerged on screens to pat traders heads gently. Stocks bounced but then faded into the close as Yellen's first press conference saw the worst market performance since Bernanke's May Taper hint. Bonds had a bad day… massive bear-flattening occurred on the release with 5s30s -12bps (5Y +16.5bps, 30Y +4.5bps) to 19-month lows. The USD was smashed 0.75% higher – its biggest gain in 7-months. Gold (and silver) dropped (down 4% on the week) as copper short-squeezed up to key resistance after early significant weakness.
The S&P 500 tracked AUDJPY through all the excitement…
The reaction in stocks is full of confusion – initial weakness which recovered quickly, then a plunge on over-confidence and rat-hike-period comments… which were then bid…
With financials outperforming in the sell-off (but yield curves flattened dramatically!!?)
Treasury yields soared (led by the short-end)
As the Treasury curve flattened dramatically… the biggest single-day flattening since Sept 2011
.
USD Index screamed 0.75% higher…
Gold and silver slipped as copper ripped
In summary – Bonds Dumped And Dollar Pumped As Stocks Stumble On Yellen Mumble
Charts: Bloomberg
Bonus Chart: Copper WTF Chart of the day…
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Goldman’s FOMC Statement Post-Mortem
From Jan Hatzius, who needs to coach Yellen much better next time around. Incidentally, this is Goldman’s take on the statement and not on Yellen’s disastrous press conference.
From Goldman Sachs
BOTTOM LINE: The March Summary of Economic Projections (SEP) indicated a more hawkish path of the policy rate than that seen in the December SEP. The statement included a move toward qualitative guidance, but was roughly neutral on net in our view.
MAIN POINTS:
1. The median participant’s forecast for the funds rate (the “dots”) remained at 0.13% at end-2014, but rose 25bp to 1.0% at end-2015 and rose 50bp to 2.25% at end-2016. The median projection for the longer-run rate remained 4.0%. Only two participants expected that the first hike would come in 2016, down from three in December.
2. The Committee adopted qualitative forward guidance by stating that it currently anticipates the fed funds rate to remain in the current 0 to 25 basis point range “for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.” Looking further ahead, the statement indicated that “even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.” In addition, the statement said that “the change in guidance does not indicate any change in the Committee’s policy intentions as set forth in recent statements.” We see this set of outcomes on the forward guidance as relatively neutral.
3. The assessment of economic conditions noted slower activity in recent months, but partly blamed the weakness on “adverse weather conditions.” The assessment of household spending and business fixed investment was changed from “has advanced more quickly” to “continued to advance.” The description of inflation and inflation expectations was unchanged.
4. As overwhelmingly expected, the Committee continued to taper the pace of its asset purchases by $10bn to $55bn/month, beginning in April. An accompanying statement on the New York Fed website indicated no other changes to operating parameters.
5. Minneapolis Fed President Kocherlakota lodged a dovish dissent, noting that the Committee did not express its commitment to return inflation to the 2 percent target strongly enough.
6. With regard to participants’ economic projections, the mid-point of the central tendency of the unemployment rate was lowered by 0.25pp to 6.2% in 2014Q4, by 0.2pp to 5.75% in 2015Q4, and by 0.15pp to 5.4% in 2016Q4. In addition, the longer-run or “structural” unemployment rate was lowered 0.1pp to 5.4%. Real GDP growth was lowered to 2.9% in 2014, 3.1% in 2015, 2.75% in 2016, and 2.25% in the longer run. Changes to core and headline PCE inflation projections were minor. The core PCE inflation projection remained at 1.5% at end-2014, rose a touch to 1.85% at end-2015, and remained at 1.9% at end-2016.
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