Submitted by Tyler Durden on 09/17/2015 - 14:16 Just hours ago, we asked if the Fed's unofficial media mouthpiece had leaked the Fed decision. Sure enough...
Submitted by Tyler Durden on 09/17/2015 - 14:01 With a 54-0 record without a rate hike (better than Floyd Mayweather's), and 58 Economisseds expecting no change, 3 a half-pregnant 13bps hike, and 53 expecting a 25bps hike, The Fed was always going to break someone's heart today. Bond yields and the USD were tumbling into the decision, which appeared correct as The Fed chickened out again...
- **FOMC: NO POLICY CHANGE, 0-0.25% TARGET 'REMAINS APPROPRIATE'
- **FOMC: GLOBAL ECON,FIN EVENTS 'MAY RESTRAIN ECON ACTIVITY'
- **FOMC: VOTE 9-1; LACKER DISSENTS, WANTED 25 BPS HIKE
Pre-FOMC: S&P Futs 2000.5, 10Y 2.26%, 2Y 77.5bps, EUR 1.1330, Gold $1118
Gold rose 1.3% yesterday ahead of the Federal Reserve interest rate announcement today. Markets remain divided and uncertain whether the Fed will increase rates by 25 basis points today (1900 GMT).
The Fed last raised interest rates in June 2006, by 25 basis points to 5.25%, shortly after that America’s central bank found itself reducing rates and since December 2008 the Fed’s benchmark interest rate has been set between 0.0% and 0.25%. Gold prices rose in the months after the interest rise and were 23% higher in 2006.
Lower than expected U.S. inflation numbers yesterday eased fears the Fed will hike interest rates later this session. The dollar came under pressure today after the weak inflation data led traders to pare bets that the U.S. Federal Reserve will deliver an interest rate hike.
Submitted by Tyler Durden on 09/17/2015 - 13:30 Historical comparisons, suggest to the FOMC to be extra careful, and don’t underestimate the trust the markets have for the FOMC to act rationally. We all expect the FOMC to act counter-cyclically; a rate rise now would be pro-cyclical, or making the problem worse. Anything FOMC members say after a ‘philosophical’ rate rise would greatly diminish its value. This comparison with Japan suggests that raising rates prematurely is detrimental and avoidable.
Submitted by Tyler Durden on 09/17/2015 - 13:10 "What scares me, or what worries me, is what the next downturn in the economy looks like, with asset prices where they are and a lesser ability of central banks to ease monetary policy."
Submitted by Tyler Durden on 09/17/2015 - 13:02 The data, according to many analysts, have been broadly supportive, with stronger growth and a tightening in the labor market that should allow the Fed to be "reasonably confident" that inflation will gradually return to target. That said, heightened global risks could lead to a tactical delay. Economisseds remain evenly split on the prospect of the first rate increase in 9 years.
Submitted by Tyler Durden on 09/17/2015 - 12:53 Below we show what the latest, September, response is to the question "what investors consider the biggest tail risk" as well as evolution of this answer in the three months preceding. Curiously both #1 and #2 risks, namely "China recession" and "EM Debt Crisis", are an indirect function of the recent and ongoing surge in the dollar, which will likely be exacerbated should the Fed indeed launch its first rate hike cycle in 9 years.
Submitted by Tyler Durden on 09/17/2015 - 12:30 Waterborne shipments of crude and condensate have been heading in one direction since the beginning of the shale revolution: up. That statement is no longer true. Nearly halfway through the month, and September loadings are more than 200,000 barrels per day lower than during the same period last year.
Submitted by Tyler Durden on 09/17/2015 - 12:05 Goldman Sachs said yesterday that financial markets are vulnerable because nobody can agree on what the Fed will do. While equity investors have been anticipating this moment with all the excitement and tension of a prizefight, as Bloomberg reports, bets on the outcome from the Federal Reserve’s rate decision are far more complicated than simply “win or lose” for stocks. Amid the tumultuous background, here are predictions of nine money managers and strategists on what to expect this afternoon...
Submitted by Tyler Durden on 09/17/2015 - 11:45 The central illusion of this era is that the Status Quo can be reformed or saved. The world is shifting from unlimited growth to limits and Degrowth. The Status Quo that is completely dependent on growth is doomed - an implosion that no amount of reform can stave off.
Submitted by Tyler Durden on 09/17/2015 - 11:41
Submitted by Tyler Durden on 09/17/2015 - 11:15 How did our financial system weaken to the point where a quarter of a percent increase in rates is more than it can handle?
The ink is still wet on a brand new executive order that reads like a cross between the Reich’s Ministry of Enlightenment and Propaganda and George Orwell’s Ministry of Truth.
Of course, in true propagandist form, President Obama isn’t calling it anything related to Nazi Germany or a dystopian novel. He’s calling it “Using Behavioral Science Insights to Better Serve the American People.”
Whatever you want to call it, prepare to be the subject of manipulation and behavioral experiments. This is a giant, official national psy-op and they’re announcing to us that they’re doing it.
What’s a Psy-Op?
As all eyes turn to this week’s Federal Open Market Committee meeting for an answer to the will they / won’t they Fed rate hike question, we face another stark reminder of how the global economy is increasingly at the whim of the central bankers with their hands on the money spigot. The would-be “Masters of the (Phoney, Manipulated) Universe” known as the Federal Reserve board have the power to send the global economy into a tailspin by hiking rates, causing a giant unwind of the almost-never-mentioned dollar carry trade in emerging economies.
Or they can waffle again, delay the decision, and keep markets in the precarious limbo they’ve been since the end of the QE3 party and the removal of the punch bowl. They could even, as some suggest, concede their utter failure to even understand let alone implement an easing-based “recovery” and try again with QE4.
The Misfortune of Being Born Into a State
In an essay titled “The State”, Randolph Bourne, an American writer, made a distinction between a country and a state that I find crucial. He described one’s country as “an inescapable group into which we are born”. In his view, a country is “a concept of peace, tolerance, of living and letting live. But the State is essentially a concept of power, of competition; it signifies a group in its aggressive aspects. And we have the misfortune of being born not only into a country but into a State, and as we grow up we learn to mingle the two feelings into a hopeless confusion”.
Bourne continues to say:
Well, in case you’ve been living under a rock, you’ve probably noticed that it’s a Fed week. Or as CNBC would put it. IT’S. A. FED. WEEK!!!!!!!!!!!!!!!
Yes, the Federal Open Market Committee meets Wednesday and Thursday and the markets have been breathlessly anticipating the FOMC’s decision on interest rates.
Will the FOMC raise its Fed Funds rate target? It’s a close call. I’m not one of the so-called Fed-Watchers and I really don’t have any insight into the FOMC’s thought process.
The Victory Report:
According to Reuters, United Nations officials handling the overwhelming deluge of Syrian refugees on Tuesday said a strong response to the human crisis is needed especially after meetings of nations’ interior ministers in Brussels. President Barack Obama is at the forefront of the Western response to the refugee crisis, a position many wish he would take in dealing with the homeless military veterans who continue living on the streets of U.S. cities.
Obama and his minions are in the process of calculating how many refugees fleeing the Islamic State of Iraq and Syria (ISIS) will be brought to U.S. communities, with some claiming as many as 70,000 will be the start of the U.S. humanitarian program. The plan is expected to include housing, food, clothing, healthcare and other necessities which will be waiting for the arrival of those fleeing war-torn Syria and Iraq.