The market is absolutely, positively certain that the FOMC will increase the FED funds rate by its Greenspanian 25 basis points, although there are some Wall Street pundits suggesting the possibility of a 50 basis point hike because of the recent return of robust data. I have suggested that the FED would have done well by raising rates in a more aggressive fashion. But with the November elections within polling range, Trump’s trade policy causing angst in the emerging markets and several of U.S. trading partners, it’s looking very unlikely (less than 5 percent chance).
Posts Tagged ‘rate hike’
Notes From Underground: Fed Forecast — 100% Chance of a 0.25% Rate Hike
September 25, 2018Notes From Underground: Dear Chairman Powell,
March 20, 2018Wednesday brings the FOMC‘s interest rate decision. The CONSENSUS is for an increase of 25 basis points to 1.50%-1.75%. Chairman Powell, you will have a chance to explain the Fed’s decision as you engage in your first press conference 30 minutes after the announcement. The financial world will have the opportunity to assess whether you will follow the Yellen/Bernanke path of attempting to control markets or to be more respectful of the collective wisdom and allow price to be determined in the tradition of Western democratic capitalist markets. The FED chairman recently acknowledged that headwinds have become tailwinds, and, even more importantly, supported by Janet Yellen’s confidant, Governor Lael Brainard. The volte face by Brainard shook the markets into the belief that the FED would actually raise rates FOUR times or more in 2018. BUT IF I WERE YOU CHAIR POWELL I WOULD RAISE 50 BASIS POINTS TOMORROW (with this CAVEAT).
Notes From Underground: She Does It Backwards and In Heels
June 14, 2017Commentators on dance technique always maintain the Ginger Rogers was a better dancer than Fred Astaire for she performed everything he did but “backwards and in heels.” At today’s press conference the financial markets were left with the sense that Chair Yellen wants to rollback the massive balance sheet promulgated by Ben Bernanke. The most “hawkish” piece from the day was when Yellen said it’s not unhealthy to have a gap between the FED and MARKET EXPECTATIONS.
Notes From Underground: Oh, Janet, There Is A Santa Claus Rally Brought About By the QE Rain
December 13, 2016Yes, the day of decision is upon us and everybody is SURE of a 25 basis hike from the FOMC. IF I WAS IN CHARGE–NO, NOT JOSE CANSECO, WHICH WOULD BE MONETARY POLICY ON STEROIDS–I WOULD RAISE RATES 50 BASIS POINTS AND ISSUE A WARNING OF MORE AGGRESSIVE INCREASES TO COME. Alas, I am but ashes and dust. The FED has prepared the market for a certain 25 but here are the things to watch:
Notes From Underground: Hey Fed, Are We At Absolute Zero?
October 28, 2015In the realm of physics, absolute zero is the temperature at which every element freezes and molecules are no longer in motion. The FED and other global central banks seem to be mimicking their scientific betters by keeping rates at a low enough level to prevent the movement of capital from their balance sheets and into the real economy. Yes, the ECB, Riksbank, Swiss National Bank are at negative interest rates but it is the velocity that measures absolute zero rather than the relative level of interest rates. This brief analysis is based on the CONTINUED FRUSTRATION of trying to understand the basis of FED communication and signalling to the markets.
Notes From Underground: For What It’s Worth (My View on Tomorrow)
September 16, 2015There’s Something happening here
What It is ain’t exactly clear
there’s a man with a gun over thereTelling me I got to bewareThere’s battle lines being drawnNobody’s right if everybody’s wrongYoung people speaking their mindsGetting so much resistance from behindWhat a field-day for the heatA thousand people in the streetSinging songs and carrying signsMostly say, hooray for our sideParanoia strikes deepInto your life it will creep It starts when you’re always afraidYou step out of line, the man come and take you awayIt’s time we stop ,hey what’s that soundEverybody look what’s going down
Stephen Stills wrote these words almost 50 years ago and it certainly applies to all the noise and opinion filling the media about a possible 25 basis point increase in the FED FUNDS RATE. The financial press has made tomorrow’s FOMC statement and Yellen press conference into a mania almost as great as the FACEBOOK IPO. Everybody who is anybody has an opinion about what the FED OUGHT TO DO.
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Notes From Underground: “You Say Why and I Say I Don’t Know” (Because Confusion Reigns)
September 9, 2015The FED‘s upcoming FOMC meeting (September 16-17) is resembling the theatrics of the Greek debt crisis: Opinions abound about what do to and the entire world has voiced concerns about the outcomes from whatever decision Chair Yellen decides. The media is filled with articles advising the Fed to raise/don’t raise. However, we’ve come to the point, JUST DO IT. Unlike Nike, there will be no victory.
Notes From Underground: Just a Note Before I Go On Vacation
July 28, 2015It’s time to take a few days and recharge the mind. But before saddling up and heading off into the SUNSET here’s a few concepts to consider. Longtime NOTES readers know that the tagline 2+2=5 is a very serious construct for thinking outside the proverbial box. The line comes from Dostoyevsky’s short story, “Notes From Underground” in which the Russian master of literature protests against the RATIONALISTS who pretend to be all-knowing, like the FED MODELS. Just because things appear to be in balance doesn’t mean they are factual, so my goal is to look beyond conventional wisdom and find relevance and profit opportunity in what may appear to be mundane. While I am away new readers to NOTES should look back in the archives to see how we dissected ordinary news to find investment possibilities. The aim is to achieve economic gain through the analysis of politics and economics for the combination of political economy is the main thrust of this BLOG. Now, tomorrow and the FED: