Also in this playlist...
This transcript is automatically generated
Very much so hasn't mentioned just a moment ago a real.
-- -- kind of firework was dropped on Friday after the close of the markets an article in the Wall Street Journal hit the wires.
That indicated serious discussion at the Federal Reserve and has now actually begun plans to wind down that 85 billion dollar month bond buying program and of course being on the loser -- sitting did you see this and people around me were saying or cares it's Friday -- what my next guest -- he has noticed something quite for some time about inflows and outflows of treasuries.
That could perhaps offer even better clues about the Fed's next move he is going to articulate does to you he's -- -- and wrap.
No relation right Larry to John -- and -- -- -- -- -- -- -- -- -- -- -- -- -- we see that on the graphic and and of course as you said my cousin has got his name spelled wrong looking you're just bring family -- research director.
You're you're on the phone with us from Florida and I'd I'd like that because again you're separated from all the chatter on Wall Street but what have you noticed because the last time we spoke.
US successfully predicted the drop in gold and that was weeks before it tanked tell us your take on the Fed in your reading of these tea leafs.
Yeah I I don't think that the defendant is any closer.
Two reducing their accommodation of course they are -- -- talk about it and of -- of course they're gonna need to plan on a way to exit eventually.
But -- if you if you look at the data they are looking there waiting for six and a half percent unemployment there waiting for.
3% or greater GDP growth and a sustainable way.
They're not going to back off on these programs and -- they have to do now.
It will one reason they actually might have to -- -- a little bit.
Is that if you look at it's big -- port which is that the treasury statement.
That the F announced puts together they actually track inflows and outflows to the treasury so this money coming into taxes and money don't going -- -- spending.
And actually in April that was is a very large.
Budget surplus spoke so well -- billion.
Let me stop -- -- so that we can -- to people so far as.
She developed that story.
Every month we get this data and we find out what's happening with the treasury but not everybody looks at it so you notice that in the month of April.
We actually saw surplus what did that tell you.
Well one thing that means is that the defense buying up treasuries as part of its program to get to eat.
-- yield curve down where it wants it it is actually now how much treasuries are coming to market how much are available so it's gonna.
Changing its amount -- it's gonna need to purchase and it's based on you know doesn't want to -- too much avail myself.
What are you should do less correctness.
That's right so it might.
It might have to taper.
Not because it it wants to because the economy is necessarily where want to debate but because there might be less treasuries.
That are available by and it doesn't want to skew the market that it's less treasures are coming up markets that this budget deficit shrank and it is significantly.
Lower than it was at this time last year.
At that stat that it is -- -- the treasury -- -- be anything less debt.
Which -- the -- might not have to buy quite as much to get interest rates -- want that so what's next Larry.
Well I'm in 88 if if this budget deficit continues to shrink and treasury issuance continues to slow.
It's possible to bed with with reduce some of that fine now not not a huge amount not enough that I -- yeah.
Don't want it to the market separate -- -- two -- -- -- -- might be to the markets or it might be for the markets it may have.
SAT word of you know alert here -- -- is a positive effect.
If for example it shows that maybe this economy is finally getting a sort of a bit healthier and therefore we don't need to prop it up without much medication.
Well they -- it if if that's the reason.
Then it is a good thing or long term.
If the data continues to improve I think they're still a big -- The economies is growing very slowly.
And there has been improvement in the unemployment.
Picture but it's still.
It's still not where he would want to see it spot where the Fed wants to see it.
Their own projections if you look at their notes -- minutes from from march they're -- pretty projecting.
Mid -- late 2014.
Home early 2015 before those measures improve enough for them to to to do.
Larry hills and wrapped with a Z of Jones brings family offices research director we thank you and in essence let me just -- still this he says do not expect the Fed.
To start making any market changes they will be very subtle thanks Larry.
Filter by section