Why The Fed Is Ready To Hike Despite Weak Jobs Report

Investors Busniness Daily ^ | 10/26/2015 | ANDREA RIQUIER

[expat_panama]

Was the dismal September jobs report the nail in the coffin for a 2015 interest-rate rise? Markets are acting as if it were, even as some economists think Federal Reserve officials see things differently.

Monthly job gains, which had averaged over 200,000 for most of the year, plunged to 142,000 in September and a downwardly revised 136,000 in August. Private hiring was the weakest in three years. The workweek and labor-force participation rates also declined even further.

Meanwhile, other data showed U.S. manufacturing and retail sales nearly stalled last month...

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There's Always Next Season

An hour after the jobs report was released, Deutsche Bank chief U.S. economist Joe LaVorgna said that he will push his Fed "liftoff" forecast out to March 2016....

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China's central bank slashed its key lending rates on Friday...

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Yellen Still Wants Rate Hike?

Yet some prominent economists argue that despite some dissent, most Fed officials, including Chair Janet Yellen, still favor a 2015 rate hike...

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"The leadership has signaled that such a move is likely if the economy and markets evolve broadly as expected, and our forecast is similar to theirs," the analysts wrote, noting the risk of weaker-than-expected economic and market conditions.

Many analysts believe that financial markets stabilized only because investors think the Fed is on hold indefinitely.

But in a separate note, Goldman economists noted that most Fed policymakers have sharply curtailed their hiring expectations...

[expat_panama]

Jobs and WallSt. are what the Fed does --or else it sure seems this is the prevalent understanding amongst our "gov't-controls-economy" colleagues here on the FR.  For decades since Carter signed into law the Fed's mandate to control the trade deficit and unemployment etc., the Fed's been saying that all will be well if the dollar's stable.  Maybe it's changing. 

Someone tell me if they think the Fed's beginning to believe that it really controls the economy, or are we just hearing from the lefties who don't want us to look at the damage O's done.

[Cringing Negativism Network]

But in a separate note, Goldman economists noted that most Fed policymakers have sharply curtailed their hiring expectations...

Jobs are the number one issue. American jobs.

Nobody except Trump is daring say it.

Which is why he is leading. Keep at them Donald. American jobs is a huge issue.

[expat_panama]

Happy Tuesday!   What happened yesterday is all in the IBD's "Stocks Mostly Stay Put After Their Recent Run" wrap-up, but right now our futures boards look mixed while gold'n'silver prices also "advance-sideways".

Econ reports:

8:30 AM Durable Goods -ex transportation
9:00 AM Case-Shiller 20-city Index
10:00 AM Consumer Confidence

Also in the news there's this FR thread--It's On: Obama Sends Destroyer To Chinese Islands, China Vows Military Response --and while central_va says it proves you're a traitor if you don't like taxes, Zero Hedge (quoting FT) says

In a move that will enrage Beijing, the USS Lassen, a guided-missile destroyer, will sail inside the 12-nautical mile zones of two man-made islands — Subi and Mischief reefs — that China has built in the contested Spratly Island chain. A senior US defence official said it would sail through the area in the early hours of Tuesday morning.

The idea is that the U.S. is putting a $3B destroyer at risk in China while China puts $14,000B at risk buying T-bills w/ no interest.  I need more coffee...

[expat_panama]

Jobs are the number one issue. American jobs.

Hmmm.  You don't care about sex?  Look, I too got a long list of number one issues and while "jobs" is important I got a few other priorities there too...

[Alberta's Child]

It's no secret that the Federal Reserve "controls" the U.S. economy. The agency's mandate was written into its founding charter more than a hundred years ago. From what I understand, the Fed has two main objectives:

1. Minimize unemployment.

2. Promote low, steady inflation.

It's really pretty simple in theory. It doesn't always work out very easily, but the Fed has been functioning this way ever since it was established.

[Cringing Negativism Network]

Sex isn’t a political issue, I believe.

However jobs are on the top of the list.

We appear to be at odds on that. You seem to support globalization. I support bringing jobs back to the US.

So we disagree on jobs. However the subject of American jobs is critically important, and neither party has said one word about American jobs for over one entire generation.

Bring back jobs.

[palmer]

As you imply, the Fed controls the dollar not the economy. The Fed controls relatively short term investent swings, not Wall St. Instead there are fundamental factors, some cyclical, some not. There are psychological factors that may anticipate or amplify any of the fundamental or Fed factors.

There are plenty of elephants in the room, not just Obama. There is broad political support for high corporate taxes and the incredible distortions created by the high nominal rates and the politicians doling out breaks. Both parties are guilty. There is also mercantile China. There are exogenous events and anticipation of them (e.g. war). There are tech breakthroughs and bursts of progress. Periodic infusions of capital come into the market, most recently from the domestic oil and gas boom. And those fade quickly as is the case now.

No, the Fed does not control the economy.

[Flick Lives]

The Fed couldn’t hike its own socks.

[1010RD]

No thoughtful person takes centralva seriously. He and his cohorts recently explained to me that the sugar tariff was protecting me and my fellow Americans from Cuban communists, along with the following known communist threats around the world:

1.Brazil: $9.5 billion (35.7% of total sugar exports)
2.Thailand: $2.7 billion (10.3%)
3.France: $1.3 billion (5%)
4.India: $1.1 billion (4.2%)
5.Guatemala: $952.2 million (3.6%)
6.Mexico: $907.3 million (3.4%)
7.Germany: $754.8 million (2.9%)
8.Belgium: $429.2 million (1.6%)
9.Cuba: $427.9 million (1.6%)
10.South Africa: $424.2 million (1.6%)
11.Netherlands: $390.4 million (1.3%)
12.Colombia: $387.2 million (1.5%)
13.Swaziland: $374.2 million (1.4%)
14.Pakistan: $291.5 million (1.1%)
15.Poland: $284.9 million (1.1%)

While totally ignoring the fact that just two billionaire families in America benefit financially. Why not share the wealth with a tax on profits from sugar? Why not add a government department of protective tariffs?

Look what BigGov has done so far!

[central_va]

I have never advocated for tariffs on agricultural or mineral imports/exports. Only manufactured goods. So stuff it.

[expat_panama]

Look what BigGov has done so far!

--and the cost to 300+ Americans goes beyond the millions for import taxes directly to big gov't to include also even more $ in those higher prices supporting central_va and his pals.

[expat_panama]

...the Fed does not control the economy.

You know it and I know it, and I really think our friends at the Fed know it too --but it's just that those guys sure don't talk like they know it.

[central_va]

Jim,

According to 1010RD "No thoughtful person takes centralva seriously"

Do you take me seriously or are you not a thoughtful person?

CVA

[SVTCobra03]

Eight Ways the Federal Reserve is Destroying the American Republic

http://z3news.com/w/ways-federal-reserve-destroying-american-republic/

[cuban leaf]

They don’t dare raise the rate. What they are doing is attempting to stimulate the economy by THREATENING to raise rates.

If they were to actually raise rates, we’d be thrown into a worse mess than 2008, and they know it.

They are trying to scare people into taking on more debt.

[expat_panama]

the Federal Reserve "controls" the U.S. economy. The agency's mandate was written into its founding charter more than a hundred years ago.

The control over the U.S. economy wasn't specifically mentioned in 1913, but rather they were thinking more along the lines of: the Federal Reserve Act : Public Law 63-43, 63d Congress, H.R. 7837: An Act to Provide for the Establishment of Federal Reserve Banks:

...to Furnish an Elastic Currency, to Afford Means of Rediscounting Commercial Paper, to Establish a More Effective Supervision of Banking in the United States, and for Other Purposes

All I can see about the 'fed-controls-economy' was in the The Federal Reserve Reform Act of 1977 which required the fed to guarantee "maximum employment, stable prices, and moderate long-term interest rates".

[Buckeye McFrog]

The IMF is still begging the Fed not to do it.

When you are standing in sewage up to your neck, rule #1 is don’t make waves.

My bet is they will not.

[expat_panama]

When you are standing in sewage up to your neck, rule #1 is don’t make waves.

LOL!!!!   My wife liked that too...

[Leaning Right]

They don’t dare raise the rate. What they are doing is attempting to stimulate the economy by THREATENING to raise rates.

I think that's it right there. And just before the next Fed meeting, they'll start searching for some economic blip that they can use as a reason to keep rates steady. And on and on it will go.

[willk]

They want to hike interest rates because they are getting pressure from the regime. It will make Obama’s economy look strong.