Posted on 07/10/2015 4:29:53 AM PDT by expat_panama
"Give me a one-handed economist!" Harry Truman once lamented. "All my economists say, on the one hand ... on the other hand ..." Though they're all economists themselves, Federal Reserve policymakers must be thinking along the same lines as they try to assess when to pull the trigger on the first interest rate hike in nearly a decade.
On the one hand, the U.S. economy is sound. Hiring is robust, housing is finally picking up, consumers are shopping more, and even manufacturing may have stabilized after a series of shocks in the winter.
On the other, fears about Greece exiting the eurozone and China's sharp stock sell-off have rattled markets for weeks now, doing enough damage that some wonder whether they could weigh on economic growth.
So which way will the central bank lean?
"The answer is a definitive 'it depends,'" wrote Steve Blitz, ITG Investment Research chief economist, in a client note Thursday.
Blitz, like many economists, still forecasts the first hike in September after reading the June Fed policy meeting's minutes, which were released Wednesday.
"The case built for the economy in the minutes was very much biased toward growth," Blitz noted, citing a reference to the holy grail of Fed economic indicators, wage growth.
"The Fed also talked themselves out of believing the official Q1 numbers for GDP were real," he wrote, adding that the 0.2% GDP contraction forced policymakers to revise their full-year forecasts down even as they left the second half unchanged.
Many analysts have noted that the central bank's economic forecasts have repeatedly been far too optimistic since the recovery began. But as the economy has gathered momentum, many policymakers have signaled a strong desire to at least get started on the rate increase process, which is likely to be extremely gradual.
(Excerpt) Read more at news.investors.com ...
It is too soon to tell
those that must churn out words speculate about pretty much nothing
It will be what it is and action to mitigate will be marginal at this point
The Fed is a follower not a leader and will not raise rates until 10-Year T Notes start moving north. They are still low because the Obamacare economy is still in the crapper with 93 million people un-or-underemployed.
Any hike will trigger a mass exodus out of the Stock Market.
Good Morning! So stocks actually closed a tad higher yesterday (in lower volume) but today futures see them soaring +0.1.26%!!! Metals look great too (+0.78%) after yesterday's continued basing. Must be because of all the bad news in Greece & China.
btw, did you know the NYSE shut down for four hours last Wed? Neither did I: The Bumbling, Irrelevant New York Stock Exchange - William Cohan, NYT
The Fed will delay until it appears a conservative will win the White house, then the media will blame the ensuing economic chaos on fear of the right wing. Book it.
hike will trigger a mass exodus out of the Stock Market.
The doesn't give a rat's patutie about stock prices or T-bill rates. The Fed will raise the discount and funds rates the minute we get inflation. There hasn't been any and there probably won't be any.
Everyone knows they can’t raise rates.
And everyone knows why.
So if/when the Fed raises rates on their own, or the bond markets exert their will upon the interest rate world, the world as we’ve known it is over.
And then say ‘hello’ to the NWO.
For a lot of savers who are retired or trying to save for the future, the NWO is here.
Here’s my take. The Fed won’t raise rates until they do. All this knee jerking about it is just like clucking in the henhouse.
Most people have emphasized Roberts destruction of Constitutional standards in his Democratcare decisions, but overlook the fact that he made a decision that continues the fiscal policy devastation that the Democrats started in 2008. Until fiscal policy is reversed and strongly, the FED cannot raise rates.
Only partially right. The FED will keep ZIRP until GS et al have milked the system for all they can get. The FED is controlled by the big banks.
And the IMF is begging them not to, indicating that our printing presses are presently the only thing keeping the world economy afloat.
That's definitely true
and will not raise rates until 10-Year T Notes start moving north
Sort of true. But the other dynamic is that the bond prices are high (causing low rates) because people expect the Greatest Fool, the Fed, to buy that crap from them. If people thought the Fed would stop buying Treasuries, the price would drop to the floor and yields would skyrocket. And of course the Fed would not want that. But your point about the struggling economy (100 million not working) is very valid too. It is a combination of both.
I don’t expect any movement - or maybe one little qtr point - before November 2016. This “recovery” (hah!) is tepid, halting, localized and fragile.
My guess is that some Fed govs are anxious to unwind the Fed’s enormous balance sheet while others are fearful of it and, mimicking spineless politicians, will vote to do nothing for as long as possible.
Let me add, for the conspiracy minded: If there is a coldly political component in the Fed’s decision making it would be to hike the rates if/when a Republican is elected.
/conspiracy mode
The FED long ago abandoned their simple Glass-Owen function, as I understand it, of assuring that banks had the necessary resources to conduct orderly business.
Now they function to always to rig the game to favor the big banks & brokerages (the rich) under the guise of controlling inflation by manipulating interest rates. And lately by printing money to buy up these worthless bank-created MBS packages. Where-the-Eff did they get the authority to do that??
My life savings via these zero interest rates & Fed money printing is serving to facilitate this Wall Street party and it pisses me off. Us savers are being robbed of our retirement!!
Thanks for the ping expat...
It is happening to me too, I WAS going to retire this year but it looks like I will have my nose to the grindstone a while longer. Postponing the real hit I will create for the millennials. They better learn to work nights in addition to their day jobs because I plan on living into my 90’s like my folks did.
I think the Fed should do a modest rate increase in September. Goosing the economy with easy money is suffering under the law of diminishing returns. Get the increase underway and I bet the market will absorb with only a temporary downturn. If the Republicans field a candidate for 2016 that has a chance of winning, the economy will get stronger all through 2016 right up to the election. Who wins will set the tone for the next 4/8 years.
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