Fed Minutes: Are They A Hodgepodge?

Fed minutes – Some have commented that the Fed Minutes is a mishmash of various discussions had by investors, members of the media, and economists. That’s probably a harsh way to put it because you can’t expect the Fed to not talk about the news of the day such as trade wars and the end of the effects from the fiscal stimulus.

The Fed Minutes look bad because they are old. The Minutes, which were released Wednesday, are from the discussions on July 31st and August 1st.

You can’t expect the Fed to be ahead of the curve in discussions from a few weeks ago.

Ultimately, I don’t care about the Fed’s analysis of the economy in terms of its forecasting ability because I do my own research. I only care about the Fed’s thoughts in terms of what it means for monetary policy. Their discussions also give me a great platform to discuss the latest data in the context of what it means for monetary policy.

Fed Minutes – Threats To Strong Economy Discussed: High Stock Prices

The Fed Minutes was all about risks the economy faces because the economy is as perfect as it can get right now as inflation is modest and growth is strong. There are reasons to worry about the second half, but if you look at the first half, there are more risks of things that can go wrong than things that can go right because almost everything went right.

The Fed worried about “elevated” stock valuations and “easy” corporate borrowing conditions. I don’t see why stock prices going up and easy borrowing conditions are bad. In my opinion, that’s like worrying about too much of a good thing.

Stocks will go down and corporations will default when there is a recession. This happens regardless of how high they got and how easy borrowing was in the previous expansion.

Stocks didn’t get that high in the last cycle as it was short, but stocks still fell over 50% during the recession.