IRS Attempting To Get Info From Swiss Bank On $20 Billion Worth of Hidden U.S. Taxpayer Accounts

This should get interesting.

The IRS suspects that UBS bank may have up to $20 billion worth of assets that are hidden there by U.S. taxpayers. The information comes from one Bradley C. Birkenfeld, a former UBS banker, who has been squeezed by the Feds and has entered a plea deal with the government.

Justice Department lawyers said late Monday that they had filed court documents in Miami asking a judge to allow the IRS to get information from UBS. U.S. investigators are seeking permission for the first time to serve what are called “John Doe” summons to obtain information about possible tax fraud against taxpayers whose identities are not known.

IRS agent, Daniel Reeves, said in a declaration filed with the summons request that Birkenfeld was one of 40 to 50 UBS bankers who traveled to the United States “on a quarterly basis to service U.S. taxpayers.” He also said that UBS employees traveled with “encrypted laptop computers containing clients’ portfolios.” UBS also made it appear as if non-United States taxpayers, rather than its American clients, owned the offshore accounts.

The Feds may have leverage against UBS in that UBS has significant assets in the United States, including UBS Securities, that can be fined or confiscated if UBS fails to comply.

John A. DiCicco, Deputy Assistant Attorney General for the Justice Departments Tax Division said in a statement:

We are working cooperatively with both the Swiss government and UBS to obtain this information. However, we are prepared to seek enforcement if that process is not successful.

Of course, with $20 billion in hidden assets at UBS, there are probably some major players who may have some influence at top government levels and who may attempt to squash the investigation.

Phil Gramm, who we just wrote about, a couple of hours ago before this story broke, is co-chairman of UBS Securities.

Vaclav Klaus: Global Warming Activists Are the Direct Descendants of the Old Marxists

Environmentalism, Czech President Vaclav Klaus tells the Washington Times, is the new communism, a system of elite command-and-control that kills prosperity and should similarly be condemned to the ash heap of history.

The full Klaus interview by David R. Sands at WaTi is here.

The Best Move John McCain Has Made...

...is to make Phil Gramm part of his advisory team. You can clearly see the influence Gramm is having on the economic positions of McCain.

The former senator is a first rate economist and a tough, tactical politician. For the take on Gramm as a tough, tactical politician, see these not necessarily flattering comments about him from the economist Murray Rothbard and from former Citibank chairman, Sandy Weill, here.

For a sense of Gramm as a brilliant economist, be sure to read an interview of Gramm by the senior economics writer for the WSJ editorial page, Stephen Moore, here.

Gramm on entrepreneurs versus do-gooders, from the interview:

When you help a company raise capital, to put its idea to work, and you create jobs, those jobs are the best housing program, education program, nutrition program, health program ever created. Look, if a man in one lifetime is responsible for creating 100 real jobs, permanent jobs, then he's done more than most do-gooders have ever achieved.

Gramm takes a swipe at Obama:

Why is America the richest country in the world?...It's not because our people are more brilliant; it's because we have a better free-market system. Why has Texas created 1.6 million jobs in the last 10 years whereas Michigan has lost 300,000 jobs and Ohio has lost 100,000 jobs? Because governance matters, taxes matter, regulation matters. Our opponents in this campaign are so dogmatic in their goal of having more government because they love the power it brings to them that they're willing to let it impose costs on the working people that they say they want to help. I am not.

Dear President Obama

Say what? Don't we have an election coming up first?

Bill Gross, Managing Director and Chief Investment Officer of PIMCO, one of the largest specialty fixed income managers in the world, with more than $800 billion in assets under management, is obviously taking Obama Kool Aid intravenously. Yes, directly into the veins.

In his July, 2008 Investment Outlook report, he writes an open letter to Obama titled: Dear President Obama. The letter vacillates between bad economics and fawning over Obama.

In the fawning department, he calls Obama "too nice of a guy to distort reality." Gross has obviously never read or absorbed Friedrich Hayek's brilliant book, The Road to Serfdom, which includes the chapter, Why The Worst Get On Top. There is no such thing as a "nice guy" coming anywhere close to being president of the United States.

Leo Durocher was an optimist when he said, "Nice guys finish last." Nice guys, especially in politics, never get in the game.

And, as far as distorting reality, Obama has done his share. Obama, like any aggressive politician, can take any side of an issue when it is necessary or convenient, see Obama’s Two Faces and Forked Tongue.

Gross obviously gets his jollies from watching Obama on television. He writes:

Come to think of it, “President Obama” does have a certain ring to it. When I listen to your speeches, you even have me half convinced!

All the best, and a fist bump to ya!

As for Gross' economics, he reveals his complete Keynesian, tax and spend self, in his letter to Obama.

He endorses Obama's call for higher taxes:

I myself won’t enjoy paying that near 50 percent marginal tax rate after you remove the current cap on the payroll tax, but my wealthy neighbors and I in Newport Beach should just look at it this way: we’ve had an eight-year lease extension on the “high life.” Now it’s time to give something back...

He endorses government healthcare meddling and calls for more government meddling in mortgage crisis:

Anyway, so you’re gonna do the tax thing, Mr. President, and throw in some form of universal healthcare to boot that your buddy Hillary will help spearhead. You hope you can get a lot of this passed despite a potentially long string of filibusters from a Senate that won’t quite have sixty Democrats. In addition, you’ll need to provide some immediate relief to homeowners in the form of FHA (Federal Housing Administration) subsidies and low mortgage rate loans that somehow have been studied and studied in Congress for the past six months yet still haven’t been passed into law.

As if the "Bank America" Bill wasn't enough abuse of the taxpayer, he calls on Obama to spend another $500 billion on some kind of stimulus program:

....this economy will need an additional jolt of $500 billion or so of government spending real quick.

Who knows where Gross thinks this money will come from, or is he so under the influence of Obama Kool Aid that he thinks it will come out of thin air?

Oh, I get it, just increase the deficit by $500 billion, to a trillion:

According to that old C + I + G formula (scratch the trade deficit for now) when C + I is reduced by $500 billion, then G should increase by that amount in order to fill the gap. The G, Sir, is you – the government deficit, the fiscal stabilizer popularized by Keynes following the Depression. And since the fiscal deficit for 2008 is likely to press $500 billion even before you take the oath of office, well there you have it: $500 billion + $500 billion = $1 trillion big ones, probably by sometime in 2011 or so. It takes time to spend those types of bucks.

Amazingly, this Kool Aid drinker does understand the destructive impact of what he is proposing:

A trillion dollars of government deficit spending is potent medicine. Its potency regarding inflation will not be felt fully during the peak deficit period. Rather, inflation will accelerate during the subsequent recovery as the government bonds acquired during the recession are transformed once again into risk bearing assets and high levels of investment. That suggests that intermediate and long-term yields on government bonds have already bottomed and will gradually rise throughout your first, and perhaps second Administration. Your term will not go down in history as investor friendly.

Oh, what some will do, say or advocate for the love of Obama.

Rising interest rates are certainly in the future, especially if another $500 billion "stimulus" package is launched, but Gross' timing on the accelerating inflation is off. The acceleration is already occurring. And somewhere, early on, in the next administration, whether it is an Obama or McCain administration, the inflation rate could very well hit 20%, if the Federal Reserve continues to print money at double digit rates.

Oh and, one more thing, government bonds, which are 20 and 30 year obligations, are not magically "transformed" into risk bearing assets. I have no idea where Gross gets this notion.

When issued, such debt would either be bought by investors, thus crowding out the ability of corporations from raising private debt. Or, the Federal Reserve buys the debt by printing even more money, thus creating and even more serious inflation problem.

All in all, I have never before seen an investment letter that so completely lowers the stature of a high profile money manger.

The Logic That Forecasts A 2009 Terrorist Attack

Sen. Joe Lieberman I-Conn. says a terrorist attack in the Unted States is likely in 2009.

"Our enemies will test the new president early," Lieberman, I-Conn., told Face The Nation host Bob Schieffer. "Remember that the truck bombing of the World Trade Center happened in the first year of the Clinton administration. 9/11 happened in the first year of the Bush administration.

Bank Of America Basically Wrote the Bank Mortgage Bailout Bill

In posts below we detailed the curious meetings between the Federal Reserve and private equity funds such as Carlyle Group, on the attempts to change banking regulations to make it easier for private equity funds to buy large chunks of banks. We wrote:

While we have no problem with free markets being allowed to operate, as we asked in our earlier post, what's all this "dialogue" between the Fed and Carlyle Group and other private equity funds about?... There's a few lessons to be learned here about how the power elite operate. First, they always take advantage of crisis to make a grab...[And]They always make things complicated.

Always be suspicious of "dialogue" between a regulator and the regulated. It usually ends up being a plot by the regulated to carve out some benefit.

Indeed, the mortgage crisis is turning into a feast for the well connected power elite to take advantage of the crisis atmosphere and use it for their own benefit. Not only is private equity attempting to grab the banks, but the elite banks are writing the mortgage bailout bill to their benefit. Where's my proof. Here's my proof. My comments on private equity attempting to grab banks is here, here and here. As for the power elite banks, consider:

It appears that Bank of America essentially wrote the bailout section of the Dodd-Shelby mortgage bailout bill. National Review Online obtained a copy of an internal Bank of America's 64 page “discussion document” on the Dodd-Shelby bill.

Stephen Spruiell at NRO writes:

Almost all of BofA’s preferences are mirrored in the Dodd-Shelby legislation. The BofA document even offers PR tips, such as “We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bail-out of the bond market.”... the similarities between BofA’s ideal bill and the bill before the Senate are obvious even to the layperson — read the document, then read David C. John’s analysis of the bailout and see for yourself.

The bill itself, as would be expected, is totally to the benefit of the likes of Bank of America and Countrywide. (Bank of America agreed in January to buy Countrywide.) MrMortgage writes:

This $300 billion Dodd-Shelby bailout is an absolute crime. It bails out the banks by limiting their loss to 10%; a joke since many of the problem areas like CA are down as much as 30% already on the median in the past 12-months and the rate of acceleration of the price declines are picking up steam. The subprime crisis is nearly over and now Prime, Alt-A, Pay Option ARMs and Home Equity Lines/Loans are failing. If they get this $300 billion passed, another $1 trillion+ will have to come on its heels for all of the other bailouts.

This needs to be fought and/or vetoed or it’s potentially $300 billion of taxpayer money down the toilet.

Timothy Carney reports:

We call it the 'Bank of America bill on steroids.'" A House staffer told me that, demanding anonymity, but speaking on behalf of aides to GOP members of the House Financial Services Committee.

In Profile: Zhao Danyang

So who is Zhao Danyang, the man who paid $2.1 million to have lunch with Warren Buffett?

Mr. Zhao manages Pure Heart Asset Management, based in Hong Kong. He says he invests based on "logic and reviews of financial statements", but he told Euromoney that "...he has [also] sneaked into factories to talk directly to workers of a manufacturer, checked sell-by dates on bottles of pills to ascertain stock turn levels for a Chinese medicine company and even resorted to counting cars on the highways of a toll road operator."

The former consumer electronics factory owner is dong well as a fund manager. According to data supplied to us by Pure Heart Management.

In 2003, Pure Heart China Growth Investment Fund showed a return of 46.51% (versus 29.7% for the Hang Seng Index). In 2004, a return of 23.86% (versus 13.5% for the Hang Seng Index). In 2005, a return of 31.64% (versus 4.5% for the Hang Seng ndex). In 2006, a return of 141.75% (versus 34.2% for the Hang Seng index). In 2007 a return of 10.70% (versus 37.02% for the Hang Seng Index) and for the first 5 months of 2008, a decline of 9.70% (versus a declne of 7.4% in the Hang Seng Index).


Mr. Zhao claims to use "the spirit of the professional paparazzi" to probe deep into the companies he examines. He is dedicated to fundamental research and holds long term, with turnover that is below average for an institutional investor.

Pure Heart's web site states:

We may find ourselves standing at the starting point of a new era in the Chinese capital market when looking forward 30 years from now on this historical chapter. Pure Heart China Growth Investment fund will accompany you to reap the rewards from these changes.

Mr. Zhao graduated from Xiamen Universty in 1994. He received a Bachelors Degree in Systems Engineering. He began his career in the securities business in 1996.

He was invited by Guotai Junan (HK) Securites Ltd in 2002 to oversee the fund management of Pure Heart China Growth Investment Fund. Mr. Zhao is currently the General Manager of Pure Heart Asset Management Ltd., Pure Heart China Growth Investment Fund. He is also acting in the post of Chief Investment Officer of "ICBC Custody Trust", "Ping An I Unit Trust", "Ping An II Unit Trust", and "SZITIC Investment Trust" .

The Value of Connections

It is rare that you get to see an exact dollar price on the value of a connection, although connections can, of course, be very valuable. That's why leading government bureaucrats are so in demand by law firms and lobbyists. The bureaucrats can provide access to, as well as info on the methods of operation of, specific government agencies.

But the value of connections extends well beyond the corridors of Washington DC. What better example can there be than the recent auctioning off for charity of the opportunity to have lunch with Warren Buffett?

The winning bid: $2.1 million. Clearly, someone sees great value in connecting with Buffett.

Zhao Danyang of the Hong Kong-based Pureheart China Growth Investment Fund won the auction, which ended Friday evening with a bid of $2,110,100.

One Small Step For Immigration Reform, One Giant Leap For Single Men

Rep. Anthony Weiner, D-N.Y wants Congress to amend current visa rules to allow 1,000 foreign models into the United States each year under their own immigrant classification.

Greg Mankiw has the details.

Quarles Goes Public With His Case for Allowing Private Equity to Buy Bank Stocks, Without Current Restrictions

Apparently the full court press is on. In addition to Bloomberg reports on the Carlyle Group talking to the Fed on "reforming" the restriction on limitations to the size of positions private equity funds can take in bank stocks, there's also an Op-Ed calling for the same.

Carlyle Group managing directors Oliver Sarkozy (half brother of French President Nicolas Sarkozy) and Randal Quarles are now aggressively promoting, very publicly, their reasons why private equity should be allowed to own major stakes in bank stocks.

While we have no problem with free markets being allowed to operate, as we asked in our earlier post, what's all this "dialogue" between the Fed and Carlyle Group and other private equity firms about? Only one sentence is required to remove the restrictions.

Further, Quarles continues to bring up the fact that public markets will not be able to provide the necessary funds the banking sector will need. Does this really mean that Quarles is angling to prevent public markets from investing at any new level that private equity funds will be allowed to invest at?

This has been an on going project for Quarles. His current argument is not any different from his argument during the luncheon I attended back in April.

See my report here.

See his recent WSJ Op-Ed piece here.

Note that the WSJ article identifies him as the former "under secretary of the Treasury for Domestic Finance in the Bush administration." More precisely, and importantly, he was the Treasury's coordinator to the President's Working Group on Financial Markets (aka, The Plunge Protection Team) But, of course, identifying him as such would add a new layer of mystery to the always mysterious operations of Carlyle.

Watching The Power Elite As They Grab Some Power and Money

Earlier this year, April 6, to be exact, I attended a luncheon meeting of the Washington D.C. National Economists Club. The guest speaker was Randal Quarels.

Quarles was former Under Secretary of the Treasury who led the Treasury Department’s effort in the coordination of the President’s Working Group on Financial Markets (aka, The Plunge Protection Team) and he is currently a Managing Director at Carlyle Group.

Plunge Protection Team coordinator? Managing Director at Carlyle Group? Folks, this is what is known as a major league insider.

At the time, I posted on the luncheon meeting and wrote in part:

In his talk, Quarles said that estimates go into the hundreds of billions in terms of capital that will be required by the financial industry because of losses sustained as a result of the current crisis. He said there will be more financial institutions that will go under in coming months.

He said that public markets will not supply the necessary funds because they don’t have the capabilities to study in detail the risks and potential rewards of the complex financials of financial institutions. He said private equity firms have the capabilities to do so and to supply the necessary funds. (N.B. Carlyle Group is a private equity firm).

Quarles stated that some changes in the structure of regulations that Paulson proposed were necessary but would take time to develop. He specifically stated that one regulation that needed to be changed is the limitation on the size of positions that non-banks can take in banks. (Note: Limitations in the size of non-banks positions in banks now limits Carlyle Group from taking large positions in banks).

It sounded to me like a power grab was being set up, and I titled my post:

Carlyle Group's Plan to Takeover the Banking Industry

Lo and behold, three months later Bloomberg is reporting that the Carlyle Group, and other private equity firms, have been meeting with the Federal Reserve to discuss removing limitations on the size of positions equity funds can take in banks.

Writes Craig Torres at Bloomberg:

Federal Reserve officials are reviewing regulations that limit investment firms' stakes in banks in an effort to channel more capital into the U.S. banking system....Fed officials have met with the Washington-based buyout fund Carlyle Group, spokeswoman Ellen Gonda confirmed. ``There is an ongoing dialogue,'' she said. ``It's not unusual for regulators to seek private sector input on policy.''

There's a few lessons to be learned here about how the power elite operate.

First, they always take advantage of crisis to make a grab. Notice how Quarles in his talk at the luncheon mentions Treasury Secretary Paulson's call for reform in financial regulation and structures.

Of course, Paulson made his comments about financial reform under the guise of changing things because of the current mortgage crisis. Nowhere did Paulson specifically state, "As part of this reform we are going to allow private equity funds, such as Carlyle Group, to buy bigger stakes in banks."

Quarles at the luncheon also mentioned that he picked the topic of financial reform way back in January. So we now have something of a timeline. Quarles had financial reform on his mind in January. Thus, one can assume, with a large degree of confidence, that the plotting was certainly going on at Carlyle back then. Paulson doesn't come out with a speech about the need for financial reform until late March. And, viola, here we are in late June and meetings between the Fed and the Carlyle Group are leaked to the press.

Which brings us to point two, of how the elite operate. They always make things complicated. Just what exactly are the Fed and Carlyle Group meeting about? It's "an ongoing dialogue" says the Carlyle Group.

If the Fed simply wanted to increase the amount of capital that banks could take from any one investor or investor group, the problem is fairly simple and could be solved with a Fed statement as follows:

Restrictions are hereby removed that prevent investors from increasing their stake in a financial institution above a specified level.

or

Restrictions on what individual investors or investor groups can invest in a financial institution have been increased to X.

Anytime a regulation is more than one sentence long, special interests are carving up little slivers for themselves and putting up barriers to entry that make it difficult or impossible for others to play the game.

The barriers to entry come in the form of complex regulations that require teams of lawyers to understand. Unless, of course, you are "in dialogue" with the regulators and help design the regulations so you know where the loopholes are, and in fact probably suggested some of them.

Taking advantage of crisis and making things complex is how the elite play. The current crisis is the mortgage crisis. They are taking advantage of the crisis to sweep up and buy into banks on the cheap, and they are sitting in a conference room with the Fed to create regulations so onerous that only the elite will be able to play.

When do you as an individual investor come in? Three to five years down the road when the banks stocks are prettied up and sold to the public at a price somewhere between 5 to 20 times what the elite paid for them.

What's Behind The Oil Price Climb?

Stefan M.I. Karlsson provides a thorough analysis of the oil markets in a column at LRC, today. He explains what is causing the current spike in oil prices, including a great analysis of why speculators are not the cause of the current price spike in oil.

My only slight quibble with Karlsson is that he seems to put a bit more emphasis on new demand factors, then on the Federal Reserve's monetary policy, for the spike in oil. He certainly mentions the money supply factor, I just think it should have been emphasised a bit more, given the seeming across the board hikes in commodity prices--which, to me, is an indication of a strong monetary influence.

Karlsson's column is here:

http://www.lewrockwell.com/orig6/karlsson9.html

No Apparent Inflation Concerns Displayed In Newest Fed Member's Significant Stock Portfolio

The U.S. Senate on Friday confirmed former Virginia bank executive Elizabeth "Betsy" Duke to the Federal Reserve Board.

Duke began her banking career as a part-time teller, helped organize a Virginia Beach community bank and later served as its chief executive officer. She also worked on mergers while an executive vice president of Wachovia Bank and was the first woman to chair the American Bankers Association. She was also at one time a director of the Federal Reserve Bank of Richmond.

Her disclosure statement for 2007 suggests that she didn't have any inflation fears, given the stock positions she held.

Although she maintained a number of money market funds, checking accounts, savings accounts and mutual funds, she also held over 50 stocks in her portfolio, 8 were banks stocks, including Wells Fargo, Wachovia, Bank America and Bank of Hawaii. She was apparently bullish on the overall market as she held a position worth more than $1 million in the Vanguard Index Trust 500 Fund.

Her total net worth is somewhere between $8 million and $35 million, according to the filing. Other stocks in her portfolio included Harley-Davidson, Harrah's Entertainment, Nike Class B, and Sirius Satellite Radio. She apparently had no major inflation concerns. Outside of a minor position in Exxon-Mobil, she held no stocks that would be clear beneficiaries of inflation. No gold stocks for this new Fed member.

Federal Reserve Maintains Inflationary Stance On Interest Rates

Below is the Federal Reserve announcement stating that they will keep the Federal Funds at a target rate of 2%. At this interest rate level, M2NSA money supply is growing at a rate of around 10%. Thus, by the Fed keeping interest rates steady at this level, the Fed will most assuredly be required to continue to increase the money supply at the 10% growth rate, if not faster. Only Richard Fisher appears to be any kind of an inflation hawk, as he voted against
the current target rate, and wanted a higher rate:

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Recent information indicates that overall economic activity continues to expand, partly reflecting some firming in household spending. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters.

The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time. Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was
Richard W. Fisher, who preferred an increase in the target for the federal funds rate at this meeting.

House Passes War Funding Bll

The House has passed a $162 billion war funding bill.

The bill will bring to more than $650 billion the amount provided by Congress for the war in Iraq since it started five years ago. Nearly $200 billion in additional funding has gone to operations in Afghanistan, according to congressional analysts.

A new GI Bll was attached and a 13-week extension of unemployment checks for those whose benefits have run out.

The new GI Bill essentially would guarantee a full scholarship at any in-state public university, along with a monthly housing stipend, for people who serve in the military for at least three years. It is aimed at replicating the benefits awarded veterans of World War II and more than doubles the value of the benefit — from $40,000 today to $90,000.

Swiss Banker to Talk.....and Talk

A former private banker for the Swiss giant UBS pleaded guilty in Federal District Court on Thursday to a charge of helping a wealthy American real estate developer evade taxes on $200 million.

The former banker, Bradley C. Birkenfeld, in his plea, also agreed to cooperate with prosecutors in a widening investigation of the bank’s practices and its clients.

Mr. Birkenfeld, 43, was accused of helping the developer, who has been identified as Igor Olenicoff, hide more than $200 million in accounts in Switzerland and Liechtenstein. But Birkenfeld had “numerous” other American clients, according to his lawyer, Danny Onorato.

In a seven-page statement of facts, Birkenfeld described some of the tactics of the private banking trade. On one occasion, according to the court document, Mr. Birkenfeld, at the request of an unidentified American client, bought diamonds using the client’s Swiss bank account and then smuggled them into the United States in a toothpaste tube. UBS trained its private bankers traveling to the United States to tell customs authorities that the trip was for pleasure, not business, according to the court papers.

He said that he and other unidentified UBS private bankers urged their American clients to destroy all offshore private banking records held in the United States; to use Swiss credit cards that could not be discovered by American tax authorities; and to falsely characterize money pulled out of Swiss accounts as loans from UBS. The entire business brought in $200 million a year in revenues to UBS.

Fed's Yellen Sees Signs of Recovery, But Conditons Not Normal

Always keep an eye out for comments from San Francisco Fed President Janet Yellen. She never rocks the boat and always tows the line. If you want to really know what Bernanke is thinking, Yellen will channel his thoughts.

This morning she spoke at an Asian banking conference in San Francisco and said that:

While there have been glimmers of hope that strains in our markets may be easing, conditions are still not normal...

Translation: The Fed is in no hurry to battle inflation and raise rates aggressively.