Minutes Point to Tapering in Second Half: Herrmann

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Aug. 21 (Bloomberg) -- Mitsubishi UFJ's John Herrmann and S&P's Sam Stovall discuss the minutes from the July 30-31 meeting of the Fed's policy-setting Federal Open Market Committee. They speak with Deirdre Bolton on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

John, one take away point seems to be everybody that was there, everybody that was surveyed said we are ok with the beginning of this pre-tapering.

In that sense they are more unified.

They said almost all of them were considering tapering in the second half of the year.

The other thing i thought was important, they mentioned a good number of participants, they thought their own views were aligned with market views.

That was a little more hawkish than people were thinking about.

I was perhaps the correct take.

Chairman bernanke has tried placing things very carefully in terms of jawboning.

The committee as a whole is more unified and sees less need [inaudible] going forward.

My big take away is it sounded as if there was a little -- it was little more dovish.

You disagree, fantastic.

There is at this it -- a possibility that economists will be saying that they think the tapering starts in december, not in september.

To push back a little bit against that.

They did mention the called the payroll growth that we have been witnessing strong.

As opposed to the week charger is asian they have been using for the last 10 or 11 months so i thought that was impressive.

Both of these things are signaling that the job market is healing, the labor market and housing market is healing and they took note of that as well.

Everything is pointing to tapering in the second half and we are ready to go.

What do you make of how this play a role -- plays a role in the dual mandate?

It is doing what they are saying they want to do.

They will let the data decide when they start the tapering program and also this bead with which they do the program.

What was interesting, they were concerned about how the markets would respond to the nodes or things they put into the notes so they were careful about what they did and did not say.

It also points to a question they have on whether the economy is strong enough and whether there could be question about earnings growth for the remainder of this year into next.

Reald gdp growth is weaker in the first half than many people had anticipated.

When you look over the the last three quarters, we are averaging less than two percent.

Certainly not a growth rate that you would say is strong enough to require a removal of stimulus.

Unemployment rate is well below where they expected things to go.

Job growth is averaging 200 thousand.

Contrary to last summer, they launched thinking that payroll was running around 115,000 a month.

This text has been automatically generated. It may not be 100% accurate.


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