Tag Archives: FOMC

Cliffs

By Alhambra Investment Partners

So far the heavy buying after yesterday’s FOMC admission has held on the eurodollar curve. Most of the contracts along the curve have only given back a few bps after the 15-25 bps moves everywhere yesterday afternoon. The salient interpretation of trading along these lines is one of deep and abiding concerns over “dollar” liquidity and the economy. With the eurodollar curve back closer to the bottom of the last event, it would be fair to say that economic strength, as policymakers are attempting to call it, is totally absent from trading.

ABOOK March 2015 Oil Eurodollars

That creates a very interesting contrast to the behavior in crude oil prices. The WTI curve had been pummeled the past week or so as the “rising dollar” prominently returned to alter the prior bounce back in the $50’s. However, the FOMC’s announcement instead of furthering such pessimism immediately reversed it!

ABOOK March 2015 Oil WTI recent Continue reading Cliffs

“A Dovish Fed”

By Michael Ashton

That’s Not How Any of This Works

I wonder how many times the Fed needs to be more dovish than expected before investors realize that this is a dovish Fed?

It may indeed be the most dovish Fed ever, judging from Dr. Yellen’s prior statements and history. And yet, investors seemed to have convinced themselves that with core inflation measured in the Fed’s preferred way far below its target (to be sure, it’s not the right way to measure it, but they’re not looking for excuses to hike), with structural unemployment still high (see chart of “Not in Labor Force, Want a Job Now,” source Bloomberg, below), with other central banks aggressively easing so that our dollar is aggressively strengthening, and with recent economic indicators surprising on the low side at the most-rapid pace since 2011, the Fed was going to put itself on a track to start hiking rates by early summer.

wanna Continue reading “A Dovish Fed”

Speed Readers

Speed readers everywhere see “does not mean that that the Committee has decided on the timing…”

And they’re off to the races!

For immediate release

[edit] Okay, so they dropped the word “patient” that everybody was hyperventilating about.  What did they replace it with?  That gobbledeegook above.  It really is unbelievable how so many take this so seriously.  Folks, we are in Wonderland…

T-Minus 1hr, 40 min. to the Great Drama

By Biiwii

Of course, at 2:01 US Eastern time the market could get very actionable, but for right now it is a ‘close to the vest’ market.  This means no big bets and no strong leans in one direction or the other.

Everyone Hates US Stocks  –Bloomberg

If that’s true, that ain’t bearish.

Hedge Funder Dalio Thinks the Fed Can Repeat 1937 All Over Again  –Bloomberg

I researched this gentleman and I love what he is all about, philosophically and in the way he views life as it relates to his vocation in the markets.  i.e. it’s not just some MSM b/s.  He is to be taken seriously IMO, in his knowledge of the markets but even more, as a respectable human (something lacking in this sphere, again IMO).

So here is the Fed’s idiotic Dot Plot that we are all supposed to be transfixed by.

dotplot

The stock market took a hit, bounced and now by my eye anyway, is not at all cut and dry.  Sentiment became toxic to the over bullish side a couple of weeks ago.  Then the market dropped and bounced.  This should not be an end to the downturn given the former sentiment profile that has not been nearly fixed yet.

But the leadership items we follow (esp. Biotech, Small Caps and Banks) are stable to good and then there are the AAII Individual Investors having been spooked, which is short-term positive (though the longer-term trend is over bullish and so, not healthy).

aaii

There’s lots more to the picture that can’t make it into a simple post.  But it is best to check assumptions at the door and let’s all just be prepared for what is on the other side.  It’s not so much the FOMC I am concerned about as my fellow market participants.  That’s why I have remained in a comfortable position and recommended the same in NFTRH.  It’s the ‘no strong leans’ market at the moment.

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By Biiwii

 

NFTRH 334 Out Now

An important new theme is introduced with respect to the Fed and its unruly subject, Uncle Buck.  Lot’s of other good stuff too.

nftrh334

FOMC Statement

For all you speed readers out there…

Release Date: January 28, 2015

For immediate release

Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace.  Labor market conditions have improved further, with strong 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; recent declines in energy prices have boosted household purchasing power.  Business fixed investment is advancing, while the recovery in the housing sector remains slow.  Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices.  Market-based measures of inflation compensation have declined substantially in recent months; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.  The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate.  The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced.  Inflation is anticipated to decline further in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate.  The Committee continues to monitor inflation developments closely.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate.  In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation.  This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.  Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy.  However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated.  Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.  This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

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.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams.

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  • 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

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