Thursday, July 30, 2015


Sorry about yesterday.  Went off to see the eye guy sand got back in time for the Fed announcement with dilated eyes which was just as well as Yellen et Cie. said nothing.  Always trying to learn I decided to say nothing as well and wait until today for the full reaction with a night of rest and thinking behind us.  There is still nothing to say, but say something I must.

Well I'm going to need more surgery...oh, never mind, do one cares but at least that is definitive.  Not much else is.

The economy grew at a es-than-wonderful 2.3% in the second quarter putting us on track for a less-than-wonderful year.  In simpler time, one would think that this would mean that there would be no interest rate movement but the Fed does have this "dual mandate" thingy (dumb as it may be) and for those bound and determined to get a rise, they will begin abandoning the economic numbers and zero in on the job growth statistics which we are now being told will be "strong."  September for this mob is the magic month and as we know, the smartest guy in the room would also like to start "normalizing" but for entirely different reasons.  It's a silly argument I guess but one wonders how strong--really--are the job numbers to justify a rate increase?  Actually, we are back to where were at the start of 2008 but as has been pointed out, we have somewhere between 25-35 million more people in the country which puts the percentage of the labor force actually working in the tank; not surprising with the tepid growth figures.  I say the argument is silly because I don't think anyone really cares; the action will be politically dictated and I still think it is December at the earliest because politics demands that no risk of an adverse reaction in the headlines should be taken.  For example, the dollar is rising slowly on the September talk; it will rise quickly on any action with a corresponding slump in exports that will be reflected in  GDP numbers.  Not good for Lil' Miss Rodman and her ambitions and heaven forbid a stock drop which of course will be the real headline grabber.

I know, this may sound simplistic but I think this is what's going on.  On top of all this we do not have what would refer to as a completely stable envirorment--economically or politically--around the globe.  One thing not often discussed Over Here is the state of emerging markets which to be blunt is not great.  This week, S & P announced the impending downgrade to junk status of Brazilian debt.  This comes as no surprise but if it occurs it will probably be the final nail in the coffin of the sitting government with the possibility of enormous turmoil to follow.  The effect on the high yield sector...already in the doldrums...could be very, very severe.  Knowing my views concerning market liquidity my concern is high.  Like Mr. Fisher, I would like to see an attempt at normalization but I truly wonder, politics aside, if this is the time.

Unfortunately, just when things seemed to have calmed down, back comes Greece with a vengeance which we shall explore tomorrow as more details concerning a truly remarkable dust-up between creditors emerge.  Coming inside to write is really hard: this has...and tomorrow will be...simply the most beautiful of summer days in the fly-over zone.

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