Posts Tagged ‘Stanley Fischer’

Notes From Underground: Fischer and Cohn, Out; Draghi In (the Spotlight)

September 6, 2017

In keeping this note as short as possible, let’s start with Vice Chairman Stanley Fischer’s resignation. I am posting snippets from the August 20 entry, in which I noted the great piece in the Weekend Financial Times with its Stanley Fischer interview. The article noted the one open disagreement with Chair Yellen in which he was miffed about not being consulted about an FOMC decision. We don’t know if Stanley Fischer is resigning because of health reasons, personal issues or over policy disputes. But this I am sure: Lael Brainard has been elevated within the group of Fed Governors as she is the confidant of Chair Yellen, thus the FED takes a dovish stance. In her dovish speech she maintains that while desiring to keep FED FUNDS steady there is room to initiate some of the balance sheet unwind. This was also her stance in June when she presented arguments for QT versus raising the fed funds rate. The impact from the initiation of Boockvar’s QT would not be as great on the U.S. dollar.

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Notes From Underground: Its Was a Great Week for S&Ps

August 20, 2017

The news was extremely positive for the equity markets last week. FOUR key points:

  1. Retail Sales proved to be much stronger than consensus;
  2. The FOMC minutes were very DOVISH as the FED was concerned about the inability of upward inflation to gain traction;
  3. The demise of anti-globalist Steve Bannon was greeted with cheers on the floor of the New York Stock Exchange. News of the removal resulted in a rally in the S&Ps on Friday, but it was short-lived; and
  4. The bobble heads of the access media reported the dismissal as an elevation of the Davos-inspired crowd, represented by the Gary Cohn wing of the Trump administration.

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Notes From Underground: In Preparation For Tomorrow’s FOMC, The Vote Is Key

November 1, 2016

There is a very MINUTE chance of any FED action ahead of the November 8 presidential election. The polls are far too close and as previously stated only if Hillary had an insurmountable lead would the FED raise rates in an effort to regain some of its lost credibility. THE MOST SIGNIFICANT PIECE OF THE FED STATEMENT WILL BE THE FOMC VOTE. The previous meeting saw a shift to 7-3 for maintaining the current policy with all the dissenters being regional Federal Reserve presidents. Stanley Fischer has been–the Governor who speaks loudly but carries a small stick–failed to bring action to his frequent speeches about raising the fed funds rate. If the Fed vice chair were to bolt from the unified group of FOMC Governors and dissent against Yellen and Brainard that would lead to a more hawkish view on FED policy. I THINK THE VOTE WILL BE 8-2 as Boston Fed President Eric Rosengren will move back to supporting Yellen .

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Notes From Underground: The Loudest Sound In the Universe Is a Habit Breaking

October 6, 2016

The markets have been in a lock-step since easy central banks have been pushing bond yields lower and equity prices higher. (Currencies are a mixed bag depending on safe haven status, high yields or commodity-tied.) The correlation is still in play as now previously profitable trades are hearing the clarion call of higher yields leading to lower precious metals, lower bond futures, some softening in commodity prices (oil excluded), a rally in the U.S. dollar and stable equity prices. Those shifting out of some long-held bonds are searching for returns in high quality stocks with a reasonable dividend. Earlier this week, global equity markets were sold as a ridiculous rumor ran through the markets that the ECB was contemplating tapering its QE program, a la the Bernanke Fed. Today, ECB Board member Vitor Constancio ( and vice president from Portugal) denied that the ECB had any inclination to curb its QE program. This led to an immediate rally in equity markets and brought the bond yields lower. Of course a Portuguese central banker on the ECB would be opposed to any tapering of QE as Portuguese 10-year note yields are at 3.51%, a significant premium to the other European sovereign debt markets (except Greece).

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Notes From Underground: The Magnificent Seven … the Governors Fall In Line

September 21, 2016

The vote was the key to the FOMC statement. Three regional presidents voted to raise rates for various reasons but at least the votes reflected their speeches. The Magnificent 7 voted to maintain rates at the current levels and wait for more time for labor market conditions to tighten as wage growth accelerates. (I TELL YOU JANET IT IS ALWAYS SOMETHING.) So the governors, plus new dove James Bullard, held firm against the outlying presidents. There’s no inner court role for Mester, George or Rosengren. My problem is that Stanley Fischer and William Dudley, both vocal proponents of raising rates, voted with Chair Yellen. Make no mistake about it, THIS IS JANET YELLEN’S FED.

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Notes From Underground: “Do You Presume To Criticize The Great Oz?!?!” (Or Stanley Fischer)

August 28, 2016

When Janet Yellen delivered her speech on Friday morning the markets reacted to the dovish overtones via buying of SPOOS, GOLD, BONDS and selling the U.S. dollar. The initial action was less muted as the algo headline readers first though Chairwoman’s words mildly HAWKISH, but as key words were measured in context the sense was Yellen was being dovish in not leaning toward a September rate increase. Yellen did give us a significant barometer of data measurement. It seems that 190,000 increase over a three-month moving average is the FED‘s BOGEY. This Friday’s estimate is 180,000, which now puts more pressure on its importance because of September’s FOMC meeting. As usual, Yellen said,”… the economic outlook is uncertain, and so MONETARY POLICY IS NOT ON A PRESET COURSE,” (emphasis mine).

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Notes From Underground: “Jane, I Tell You It’s Always Something” (Rosanne Rosannadana)

July 26, 2016

In a tribute to one of the great comediennes of modern times–and no I am not being RIDICULOUS–the FED meeting will result in an homage to the early cast of Saturday Night Live. On the “Weekend Update” segment, Gilda Radner would do her shtick with Jane Curtin and end with, “Jane, I tell you it’s always something.” This is what Chair Yellen will reveal tomorrow. In an effort to stall another rate rise the FOMC will cite several possible headwinds facing the U.S. and global economies. The U.S. DOLLAR will be a concern because in the Sara Eisen interview with Vice Chairman Stanley Fischer he revealed that the FED did consider the DOLLAR in its decision-making.

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Notes From Underground: Cleaning Up the Disinformation Of the Brexit Vote

July 6, 2016

Some quick hitters before getting to work on the implications of Friday’s employment report.

***Before the Brexit vote, Monty Python member John Cleese opined in the Daily Mail that he was voting to leave because Britain was swimming upstream in its efforts at reforming the EU. He suggested the best way to foster change in Brussels was to kill Jean-Claude Juncker. This is a harsh assessment, but I suppose Kevin Klein would be up for the job.

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Notes From Underground: *Uncle Charlie Makes the Fed Like Michael Jordan … Can’t Hit the Curve

May 18, 2016

*NOTE: Uncle Charlie is baseball slang for curve ball

Today, the markets validated the recent moves in the YIELD CURVES as the April FOMC minutes reflected a desire by MOST participants to raise in interest rates at the JUNE meeting (kudos to Mr. Art Cashin for presciently discussing the importance of “MOST” prior to the FOMC release, or if you prefer LEAKS). It appears that the “data dependent” FED is certainly prepared to raise the FED FUNDS rate (in addition to the lower-bound reverse repo rate, and upper-bound interest on excess reserves rate) as long as the data is robust enough to signal full employment and is having the desired effect on wage and overall price inflation. The minutes certainly reflect the hawkishness of Rosengren, Mester and Lacker but it begs the question: DOES MONEY TALK AND BULLSHIT WALK? For as hawkish as the April minutes have been defined by the previous five days of price action, HOW COULD THE VOTE HAVE BEEN 9-1 in favor of keeping rates unchanged?

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Notes From Underground: Like Kevin McCarthy’s Cameo in the Remake of Invasion of the Body Snatchers

March 16, 2016

I TOLD YOU THEY WERE COMING. When Janet was named FOMC Chair I wrote a piece about Ms. Yellen not being a friend of Wall Street as she was first and foremost a LABOR ECONOMIST. When she took the FED reins corporate profits (as a percentage of GDP) were more than 11%, around all-time highs. I opined that Chair Yellen would prefer to see wages rise and corporate profits fall so as to adjust the economic balance toward labor and away from KAPITAL. In today’s FOMC statement I believe that Yellen let it be known again that inflation running hot may be beneficial if it results in higher wages. The sense of the FED was so transparent that even Diane Swonk actually raised the issue rather than performing her typical lap dog tricks and heaping unwarranted praise upon Yellen. Swonk poignantly said the underbelly of the economy and the Fed was revealed. She also said very clearly that Yellen and her husband were both labor economists. Scott Minerd also supported this view. In backing up Swonk’s analysis, Minerd noted that Yellen appears ready to overshoot on inflation as “she wants to see wage rises sustained.”

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