Tag Archives: FOMC

Credit Follows the Dollar

By Jeffrey Snider @ Alhambra

Goodnight Janet; Credit Follows The ‘Dollar’ Now

On this side of the “dollar” world, credit markets have all but written Janet Yellen into irrelevance. Despite her pleas (because of?) last week, there isn’t any part of money dealing or fixed income that is taking her “certainty” about recovery and “inflation” as even a partial setting. So lost is the FOMC, that everywhere you turn these markets are moving opposite.

Where that has to sting the most is “inflation expectations.” Proving to be far more than just crude prices (which have largely been stable since August, at least in the view of not crashing again), breakevens are now at lows last seen in the dark days of 2009, surpassing that first “wave” earlier this year. Trading in the past few days has seen TIPS hedging interest drop sharply, which can only count as credit markets giving up on the recovery narrative in full – once (to January 14) might be “transitory”, but twice eight months later and at new lows is goodnight Yellen.

ABOOK Sept 2015 Asian Dollar Inflation Breakevens New LowsABOOK Sept 2015 Asian Dollar Inflation Breakevens Continue reading Credit Follows the Dollar

FOMC: Crystal Ball Time

By Biiwii

[edit] ha ha ha… among the usual ‘blah blah blah’…

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.”

FOMC Statement

Let me gaze into my crystal ball, with the confidence of a genuine guru* and the vision of a mystical Swami.  Sifting through my notes about leading indicators, low unemployment, but also cratering public confidence, I see… (not that you should give a damn what one faulty little participant sees)… but bear with me now as I render the great forecast…

I see the Federal Reserve folding again today, perhaps with some stern words imploring us to stay vigilant for a rate hike coming before year end.  In this scenario another small chink in the armor of impenetrable post-2011 confidence in these clowns would be had.

clowncar, brought to you by FOMC

Until today I had actually been leaning toward the other scenario, that the Fed finally comes through in a show of strength, all the while with QE 4 in its back pocket.  Actually, I am about 55%-45%, so the rate hold view is just a small lean.

The reason for the shift actually has little to do with the reasons we might find for a rate hike or rate hold.  It has more to do with the stock market, which has chosen to stay on our plan, laid out weeks ago, for a strong post mini-hysteria bounce.  In other words (and this is still a guru-like prediction here, which you should always treat as a side show), an FOMC roll over could provide the necessary burst of euphoria to get us to and perhaps even through our Resistance #2 (SPX 2040) and burnish peoples’ happiness again.

That could be a great bearish setup.

* You’re right of course, there is no such thing!  Only people promoting themselves as such with a big boost from the mainstream media, which is inherently lazy in its sourcing.

Yellen Just Doesn’t Factor

By Jeffrey Snider, Alhambra Investment Partners

When I wrote on Friday that I was encouraged for the first time in years over the combined rise of Trump and Sanders I meant nothing by way of suggesting either as an actual candidate or what they might do should they pull it out. If anything, I implied that the political situation might have to follow the economy; that it should get a whole lot worse before it gets much better.

The point was not so much about the candidates themselves but the palpable angst that they loosely but clearly represent. It is a growing bipartisan rejection of the status quo as it relates to the economy. For years now, the political class has been lying about the state of the recovery because economists have so fortified their temple. Monetary policy and fiscal “stimulus” are all that there is and nothing else except that which retains the political hierarchy remains. It joins Tea Party and socialists alike, to tell Janet Yellen and/or Wall Street “enough.” The uniting factor is an as-yet amorphous or ephemeral sense that “something” is wrong and that those that continue to press on as if there weren’t need to be removed.

Continue reading Yellen Just Doesn’t Factor

Around the Web

By Biiwii

It has been a while since we went around DARPA’s creation (or was it Al Gore’s?) of networked thingamajigs…


…Same Dollar ‘Rampage’

By Alhambra Investment Partners

July Closes With Same ‘Dollar’ Rampage

The “dollar” has ended the month much the way it started. Despite headlines suggesting the dollar is “down” today, it is very much proving to be disruptive across every proxy. Gold was down to $1,080 at the AM fix before rebounding. Commodities were sold broadly, with copper back near $2.359, down almost $0.02 at some parts of the futures curve; oil is down too, with WTI in the front back close to $47.

ABOOK July 2015 Dollar Copper 31st Continue reading …Same Dollar ‘Rampage’

Less Certainty in FOMC…

By Alhambra Investment Partners

There Is Less Certainty In FOMC Words Maybe Even A Little Fear, And Money Markets Know It

The FOMC policy statement released last month wasn’t improved by the “minutes” publicized today. If you believe the committee is “hawkish” then there is plenty for you to find agreement; the opposing equally so. From what I see, they spend an inordinate amount of time and words on the labor market, but after repeated emphasis that instead of fashioning confidence actually begins toward confusion. The labor market is clearly great and getting better, but…

If that were the case, there would be no qualification necessary; and they know it. Right at the outset is the Fed’s first official mandate which has been twisted by mathematical trickery into somehow finding 2% inflation as an intended target which creates price “stability.” Yet, for all their conjuring and QE’s, the PCE deflator has remained underneath that target for going on now three full years. In the orthodox understanding, that is a major problem and indicates more than something amiss.

Continue reading Less Certainty in FOMC…

Animal Farm was a Template

By Alhambra Investment Partners

I am more convinced than ever that the FOMC is simply trying to scare a recovery into existence. The June update to the Fed’s models for central economic tendencies were, in a word, atrocious. The economy was marked down in almost every facet, and not by a little. The upper boundary on the central tendency for GDP was dropped by 0.7%, all the way to just 2% from 2.7% at the March update. That means, given the current thinking which somehow includes an economy strong enough to consider ending ZIRP (from an orthodox perspective), this year is going to be worse than last year.

Somehow out of all that word salad statement, we are to assume that the Fed is even more convinced that the economy has only gotten better if only because it got worse?

ABOOK June 2015 FOMC Central Tend 2015ABOOK June 2015 FOMC Central Tend 2014-16 Continue reading Animal Farm was a Template

FOMC Statement

By Biiwii

Blah blah blah… growth is… blah blah blah… to support progress toward maximum employment… blah blah blah… interest rates… blah blah blah…

Here, read the FOMC statement for yourself…

For Immediate Release –FOMC

Further, here is the live blog that will be doting on Yellen for the next half hour.  Personally, I have better things to do.


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