Tag Archives: FOMC

Around the Web

  • For you junior mining enthusiasts, Otto at IKN relates his frustrations with trying to do the right thing and be a good egg among mostly rotten ones, then rubs it in the face of certain hate mailers[biiwii comment: there is a reason he and I have gotten along well over the years, and that reason is that I perceive him to be a rarity in the gods-forsaken junior mining sphere… honest and in touch with regular people]

FOMC

In other words, we may raise interest rates or we may not.  Ha ha ha…

[edit] subtext:  screw the savers, let’s pretend that the hype is true and the great November ‘Jobs’ report is going to fan out and start enriching Main Street now that the top 1% are not only bailed out, but enriched beyond their wildest dreams.  Let’s pretend it has nothing to do with the fact that we already know we cannot raise interest rates without some… how shall we put it… significant side effects.

Release Date: December 17, 2014

For immediate release

Information received since the Federal Open Market Committee met in October suggests that economic activity is expanding at a moderate pace. Labor market conditions improved further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has continued to run below the Committee’s longer-run objective, partly reflecting declines in energy prices. Market-based measures of inflation compensation have declined somewhat further; survey-based measures of longer-term inflation expectations have remained stable.

Continue reading FOMC

Around the Web

 

FOMC Cites Job Gains?

Fed Announces End to Bond-Buying, Citing Job Gains  –New York Times

Just a week or so ago one of the Fed’s three most celebrated hawks jumped the mic with a ‘shucks ya know, we could always delay the end of QE’ routine as the stock market plummeted.  They don’t make hawks like they used to.

So what does the FOMC really mean, ‘job gains are good so we are ending QE’ or… ‘phew, that was a close one but the market took the Bullard bait and is back near the highs so we are ending QE… for now’.  I’ll take ‘B’ Alex.

I seriously wonder how people other than promoters in the media and the financial services complex can continue to fall in line behind this transparent stuff.  Maybe it is not really people after all but instead a bunch of connected black boxes, dark pools and other such robo systems simply programmed, without feeling, to follow the code.

As if its ears were burning, here comes SlopeCharts again with the truth…

sp500

But… It… Is… What… It… Is… Yes, I get it.

Despite the impression that this racket is morally bankrupt and dishonest, it has also been very bullish for various asset classes since Greenspan first alarmed people by taking interest rates all the way down to below 1% in 2003.  Now the robots running the Fed have taken it a step further and institutionalized ZERO percent policy (AKA financial Homicide upon savers), which according to the FOMC will continue on indefinitely.

Look at the chart above and the long journey from when Greenspan began eating the seed corn Volcker left.  And now here we are, with a strong economy, a ridiculously bullish stock market, ZIRP-infinity, etc. and some clowns would have us believe that QE is terminated because of strong jobs.  What, last week when James the Hawk spoke to the contrary jobs were not strong?  Please.

In the very best light, they are day trading information and talking out of too many sides of their gaping orifice, and it sucks.

A Stroll Through Market History on FOMC Day

We take the Way Back machine to a time of normalcy and plenty, in the 50’s when the stock market did okay but savers were paid (through T Bill yields) to do the most prudent thing people in a natural economy can do… save.  Ever since 1980 the theme has been for the nation to eat its seed corn, with asset owners getting increasingly more portly in the process and savers nudged ever further out to the margin.  The S&P 500 has sure got no complaints these days.  It’s in lockstep with policy.

sp500.1

The 10 year view shows savers have been erased from the picture.  ‘Screw them’ is the implication as the brave new world of finance follows one rule,  ‘asset appreciation or bust!’  In service to asset appreciation has been the duel input of ZIRP (zero rate policy) and a rising money supply, much of which we’d presume was instigated by QE’s money printing and Treasury and MBS asset purchases.  S&P 500?  Still not complaining.

Continue reading A Stroll Through Market History on FOMC Day

Pre-FOMC Bounce

Okay admit it, who got the jitters and shorted bullion (or anything else) this morning?  My SLV calls just went green for the first time [edit; and I took the green, very modest though it was].  Looks like an asset party spanning across markets (as Uncle Buck gets heavy) to me.

Problem is, we have some interest rate manipulators in high places making an announcement tomorrow and a market full of casino enthusiasts trying to figure out which button to push in response.

I’d have preferred a thick and pervasive negativity heading into that statement, but whatever.  It may make sense to flatten out a bit or hedge into the statement.  I will not even be in front of a screen at 2:00 tomorrow.

gld.slv

CNBC on Gold

As Fed Looms, is Gold’s $1200 Support Vulnerable?

What kind of FOMC week would it be without some gold obsession in the headlines of the mainstream media?

Gold may drop to $1,200 an ounce, possibly breaching the key support level, thanks to a resurgent U.S. dollar and higher Treasury yields on expectations that the U.S. Federal Reserve could signal tighter policy this week, CNBC’s latest survey of strategists, analysts and traders shows.

Says who?

“In the shorter term I believe gold tests $1,200, trades as low as $1,190 or so, after which the bargain-hunters will come in and move the price back to the $1,240 to $1,250 level,” said Anthony Grisanti, President of GRZ Energy in a September 15 commentary. “Geopolitical has been quiet and all major economies are easing one way or another. And that makes the Greenback the strongest buck on the block. My bias for gold is lower.”

Oh, says Anthony Grisanti.  Okay.  Well even just mentioning “geopolitical” disqualifies Mr. Grisanti because it has nothing to do with gold.  But for the sake of argument, gold has already lost support per this alternate chart I am using due to stockcharts.com being on the fritz this morning.

gold

See that low at a nice, crisp 1240?  That was a loss of support.  Before that gold dumped out of a Symmetrical Triangle, targeting below 1200.  I am flying naked here without stockcharts.com, but I don’t recall any notable support at 1200.  The strategist wouldn’t be talking about ’round number’ support just to fill some headlines on FOMC week, would he?

Continue reading CNBC on Gold

FOMC Targets Grandma, Again

Yes our economy is built on such a sound foundation that we dare not even think of implementing a moderation of ZIRP, Grandma be damned.  Let her jump into the risk pool with everyone else.  QE tapering is next to nothing without a ZIRP phase out.

“The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run”  –FOMC

These people apparently know the paradox of their own policy in that it tends to bring about liquidations because everything has been built after all, on the will of man (and woman), not on productive endeavor, savings and real investment.

ZIRP Up Next?

Everyone expects Janet Yellen to be a rolling over, inflationist stooge just like they did Ben Bernanke.  Bernanke came on board after Alan Greenspan had taken the Fed Funds rate up to around 5% if I remember correctly.  Inflationists and gold bugs thought they had it in the bag when ‘Helicopter Ben’ assumed control.

Indeed, Bernanke did what he was supposed to do (per the ‘Helicopter ‘Ben’ script) as systemic stresses began to gather in 2007, addressing that pesky Funds rate, culminating in December, 2008’s official ZIRP (zero interest rate policy).  Here again is the chart showing the S&P 500’s ‘Hump #3′ attended by this most beneficial monetary policy.

spx.irx

As noted again and again, the much trumpeted ‘taper’ of QE is not only not a negative for the economy, we have made a strong case that its mechanics are actually a positive, in the near term at least.  But putting ZIRP on the table would be a whole different ball of wax.

Continue reading ZIRP Up Next?

FOMC

  • We want more inflation; it’s better for the economy
  • Taper continues as expected, it’s a non issue [my view]
  • We don’t dare mess with ZIRP…

The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Full statement from FOMC

Post Crimea, FOMC Meeting Next

The HUI Gold Bugs index got Ukrained to the extent that global crisis hype seeped into this market leading into the weekend.  The S&P 500 got Ukrained the other way as people actually acted as if the Crimea question is a macro fundamental.

hui.spx

I think after today the books are square on Ukraine but not yet the FOMC meeting, which will provide another hype opportunity.  Will they or won’t they ruminate about an eventual hike to the anti-Grandma Fed Funds rate, AKA ZIRP?

Continue reading Post Crimea, FOMC Meeting Next