Markets Lay Bets On No Rate Hike; Economists Differ

Investors Busniness Daily ^ | 09/15/2015 | ANDREA RIQUIER

[expat_panama]

Yellen May Surprise You Futures see 25% chance of ‘liftoff’ on Thursday;2-yr. yield hits 4-yr. high

What if they threw an interest-rate hike and no one cooperated? The Federal Reserve has been edging tentatively toward the final step of monetary policy "normalization" for years.

But events have conspired against it. In 2013, the mere mention that the Fed might slow additional bond buys sparked a worldwide market "taper tantrum." Ever since, despite broad consensus that the U.S. economy is on firm footing, one "one-time" event after another has cropped up to test that belief: the worst winter in decades, oil prices plunging enough to push inflation negative, a possible breakup of the eurozone, and more.

Now, even though the global outlook remains delicate, many economists are voicing what just weeks ago seemed unthinkable: The Fed on Thursday will grit its teeth and finally pull the trigger.

Investors Vs. Economists

To be sure, much skepticism remains about whether a dovish central bank...

[snip]

...effects from Fed tightening, such as the impact of a stronger dollar on U.S. manufacturers and how emerging markets will manage outflows.

Still, "the degree of stress in broad financial markets, which increased sharply in late August following concerns about China, appears to have subsided," wrote Cornerstone Macro economist Roberto Perli in a note.

The Nasdaq rose 1.1% Tuesday ...

[snip]

..."I don't see a big deal. I see some volatility, some learning," Kotok said. But that's to be expected from the wind-down of a financial crisis response on the scale of this one. "We're writing the new textbooks now."
 

[expat_panama]

I've been trying to find Las Vegas odds makers' take on this but w/ no luck.

[wastoute]

The Fed will wait until the Klown is out of office. Coordinating with the DNC. Then the Rats can blame Trump for the crash.

[expat_panama]

A very good mid-week FOMC mtg 1st day to everyone as yesterday's trading powered up over a % in rising trade.  Metals traders  seem to be a bit more subdued continuing a stabilizing base w/ little change in price.  Futures traders right now are upbeat with most everything seeing stocks up 0.02% and metals +0.28%.   Plenty of announcements:

7:00 AM MBA Mortgage Index
8:30 AM CPI
8:30 AM Core CPI
10:00 AM NAHB Housing Market Index
10:30 AM Crude Inventories
4:00 PM Net Long-Term TIC Flows

--and neat FR threads:

• Democrats Are Falling In Love With A Radical Leftist [Sanders]
• Donald Trump: Bernie Sanders ‘knows the problem, at least’ on trade
• Scott Walker’s Labor Reforms Would Make Unions More Accountable to Their Members
• Hey, Could We Spend a Little Bit of Primary Season Talking about Policy?

 

[expat_panama]

wait until the Klown is out

Whoa--  Like we never know the future but making guesses for thru Jan. '17 is a bid bold I'd say.

[Diana in Wisconsin]

“We’re writing the new textbooks now.”

Pretty sure he MEANT to say:

‘We’re cooking the books right now.’

[wastoute]

Making money is predicting the future. It was no problem predicting gold would go through the roof if a Marxist was sworn into office in 2009. I made out well. In at $850. Out at $1800. Watch. I would short everything in sight in 2017.

[firebrand]

Unless they have a better reason for wanting it sooner.

[firebrand]

Unless they have a better reason for wanting it sooner.

[wastoute]

You think they want to destroy Trump now? Wait until Jan. 2017. Of course, even TPTB can’t take too much pain. Things will crawl back up. 6 to 12 months.

[Sequoyah101]

Appreciate your posts and notices but note that your about page looks dated? Do you have an updated view since you wrote it in what looks like 2004ish?

Amazing isn’t it? No interest rate change for the last DECADE... we have well and truly been in an exceptional period for investors. New paradigms for the time. It was less than 10 years ago that we could stop accumulating and buy a real honest to goodness retirement annuity that stood a pretty good chance of getting us to dead with little concern. Now, we are thrown to the wolves with little choice but to gamble our future away in the equity markets. We have all been forced to become market soothsayers and even worse, give 1% or more of asset base to someone to balance it into a “diversified” portfolio that seems to just track the market indices.... brilliant. That 1% represents about 1/3 of what we MIGHT be able to safely live on from our fragile little nest egg. So, in addition to the welfare leeches you have supported all your working life you will support a financial adviser who drives an AMG Mercedes or Masseritti.

The retirement planners would have us be scared to death one way or another so that our little egg just accumulates and their 1% cut grows as much as possible. They strongly suggest we work another year and another ad nauseum. Keep their cut flowing in and keep us as slaves to them. Don’t offer any products that spread mortality risk, withdrawal risk or any risk... keep us fearful and accumulating. Accumulating is the only strategy most of them have. Very few offer any plan for harvest and very little is written about it... I am doubtful it can be done successfully by an individual investor / retiree. And so we work and save as much as we can and fret.

One wonders how much retirement money will be piled up and then eventually confiscated and never become the fruit of a long life of labor to be enjoyed? The retirement scam in this country might go down in history of one of the greatest acts of fraud ever perpetrated against mankind.

[Bluestocking]

The only reason the Fed wouldn’t raise interest rates this week is because it knows the economy is not doing well.

Which would mean the Fed also knows that all of the rosy government figures that are being issued, as well as the media’s happy-days-are-here-again cheerleading, are mostly propaganda.

So we’ll soon see how our economy is REALLY doing.

[scooby321]

Economy is smoke and mirrors and doesn't want Hillary to explain a recession

[expat_panama]

it knows the economy is not doing well.

That may be asking too much of the Fed.  I've caught them announcing that a particular policy was based on a GDP trend (a big drop in the last year of GWBush) that when I checked I found to be false to fact.  Couple that w/ the way they tend to ignore what most see and focus on weird stuff. Ultimately they're really only supposed to care just about inflation, but frankly I've yet to see much of that. 

Personally I see a downside risk due to Fed hubris --but I'd love to be proved wrong.

the rosy government figures that are being issued, as well as the media’s happy-days-are-here-again cheerleading

Actually, gov't figs are really not all that rosy, it's just that the cheerleaders keep mum about the rest of the story.

[Buckeye McFrog]

Yellen does not want the blame for tanking the world economy. No rate hikes until some positive economic signs are seen somewhere else in the world.

It could be a LOOOOOONG wait.

[CPT Clay]

.25 will not be the end of the world.

[citizen]

So we’ll soon see how our economy is REALLY doing.

Imo, this 'recovery' has been flat to crappy at best.

Also imo, the central banking friends of the big players worldwide are extending ZIRP for as long as possible. These players are making huge sums alternating their short and long positions as the markets fall and rise wildly.

[expat_panama]

.25 will not be the end of the world.

No, but you could see it from there. 

Yellen does not want the blame for tanking the world economy.

--and she doesn't want the blame for unending ZIRP either.  Another option she has is to impose a 0.0625% rate hike.  Sure, some would say it would be a joke but something like that would at least open the door w/o having to go anywhere.

[Aquamarine]

What you say is sad but true. The only place I make any money these days is on my credit card reward points that can be used as cash to pay down the balance of my charges. Know a couple who charge everything all year to build up around seven hundred dollars in reward points that they use for Christmas presents.

[citizen]

You wrote two very funny things! :)

[citizen]

I receive reward card credit every 8-10 weeks for a week or so worth of groceries.
I know that’s not very much but then I don’t purchase much beyond necessities.