Minutes = Good Cop, Bad Cop

So we have our good cops:

Several others argued that the potential costs of reducing or ending asset purchases too soon were also significant, or that asset purchases should continue until a substantial improvement in the labor market outlook had occurred. 

And we have our bad cops:

• SEVERAL FOMC PARTICIPANTS SAID EASING MAY PROMPT EXCESSIVE RISK -Read as asset bubble which we already have and inflation
   
• MANY FOMC PARTICIPANTS VOICED CONCERN ABOUT RISKS OF MORE QE-Read exactly as stated here, the potential good of more asset purchases is starting to look less appealing vs. the consequences of trying to withdrawal policy accommodation which is always the harder part
   
• SEVERAL ON FOMC SAID FED SHOULD BE PREPARED TO VARY PACE OF QE-This is exactly what was said on September 13th when Bernie added the "Within the context of price stability" sentence, the market didn't like that. From there they went from a calancer based "You can count on ZIRP until xx/xx/xxxx" to, "Asset purchases should reflect the incoming economic data."- Note that the first the market knows EXACTLY what to expect, the second is conditional and the market hates uncertainty.

• FOMC PARTICIPANTS SAID ECONOMY WAS ON 'MODERATE GROWTH PATH' They can't back out until the above is true or they say it is true despite the fact we just printed our first negative GDP since 2009!!! Like I said last night, Bernie says he has our back as long as need be, they are reducing the bar for, "Need be"

• SEVERAL FOMC PARTICIPANTS SAW IMPROVED U.S. CREDIT CONDITIONS Read same as above

• A NUMBER OF FED OFFICIALS SAID TAPERING QE MAY BECOME NECESSARY They started this with "Economic conditions", then this week with regard to paying banks $50 bn a year in interest and that not looking good, this is the exit plan maturing while trying to seem like they are not taking away the punchbowl.

If you read recent posts and last night's market wrap, it was all there, everything above. The thing about "Good cop, Bad cop" is that they are working together to accomplish the same goal, I'm sure you can figure out what the goal is. When was the last time you heard the F_E_D explicitly bring up details about a potential exit? Not until Sept 13th did they even hint at it, now it's getting a bit deeper each time.

Right now we are seeing a lot of knee jerk in the market, but there will likely be one clean knee jerk break, I almost feel like there's not much use in watching right now with the TICK looking like this...

However you never know when that passing moment of clarity will come so I'll keep watching, I think on the whole this is not good for the market, I think the market will start to reach that perception if it hasn't already which I think smart money has, but we always want to watch for the traps.