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So we got some positive signs on the economy today as he learned that April new home sales rose 2% from march.
And are now up 13%.
From year earlier.
And jobless claims fell by 23000.
Last week to a better than expected 340000.
And here we are and -- -- -- isn't that a lot pitching line to me now to break it down and make some sense in the -- -- -- done -- senior US economist for Deutsche Bank.
-- -- -- Good afternoon tonight -- -- -- a -- to digest -- just Germany before congress and then the last fed minutes what do you think will be the next step in monetary policy.
I think the next step will be a taper but I think it's going to come later than expected.
-- that the excitement over -- Bernanke's testimony yesterday I think was a little bit overblown.
Thought he was being pressured by the chairman of the JEC to answer the question that could.
Potentially announce -- -- or or implement the taper before Labor Day.
And theoretically that's possible if the economy catches fire in and -- labor market starts booming.
I think that was the intention of the -- -- -- it is possible.
If he gave a longer answer I think he would have -- But fairly unlikely as well nonetheless the markets ran with that Danga.
Of people that a little bit meant that a staple of that.
God I I think the real tone of his actual testimony not maybe a little bit of a club during the Q&A.
Was that the more important message that the Fed's willing to taper but they're not seen the improvement in the economy.
You know is that there I -- not a contradiction an intentional contradiction.
-- -- -- To the minutes I I certainly don't think it was an intentional contradiction I think he was giving -- -- been -- it academic or theoretical answer to a question -- people took a very literally.
-- -- in the New York spent today out with some forecast.
Forecasting the jobless label -- will decline to six and a half percent with inflation moving back to the Fed's target by the fourth quarter of 2014.
Do you think that's -- balance the time those are the conditions right if that has warned S that they will finally begin a formal exit strategy.
And those stuff forecasts are up fairly consistent with our own forecasts.
Really what's going to be important as what happens in the near term.
And that I suspect that as we get into Q3 and we get a little bit further away from those tax increases at the start of the year as well as the -- -- there.
Which is really waiting on Q2 activity out of Tennessean economy shift in the third gear so we've been growing yet two and a half percent pace in the first half of the year.
If we shift towards three and three and a half percent.
You're going to see a much faster pace of job creation right and that's going to be what -- -- the impetus for the Fed to begin moving towards that -- Really a three and a half percent expansion case is enough for the economy to sustain and grow without fed intervention.
Absolutely so as we move to that 3% to three and a half percent -- you go defeat nonfarm payrolls.
Improve to maybe 225000.
And that's going to signal to the Fed that.
We have the all clear the unemployment rate it'll move in the right direction -- in an economy that's -- three to three and a half percent.
Inflation is going to start to pick up as well so all those signals will start to look pulled together.
Not in an urgent way that the Fed's going to have to rush to change -- policy.
But it will signal to them that they can begin to.
Dip their toe into the water so to speak and begin reducing the pace of purchases of beginning that very long fed except process right they have and and I -- it's orderly 2 o'clock exactly unwind the balance -- and then eventually start normalizing interest rates as well.
We'll have to leave it there but just for today policy generally didn't convert it on my -- race.
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