...Then you say you will and then you wont...
You're undecided now so what are you going to do?
Great song. Could have been written with this Federal Reserve Board in mind. The minutes of the July meeting came out today and revealed a Fed that really didn't know what it was that they would do. Oh, I think they want to "begin to normalize" (raise rates) although no one seems to have a clue just what normal means, but while they liked some things about the economy, they were unsure about others and decided to...well maybe...perhaps...think about...waiting. Raising rates is hard, I don't deny that but with this bunch it's really hard as it goes against their political leanings and pays on fears of the damage any move could have on the events surrounding an election year. There's a good deal of paralysis by analysis to be sure, but in the end it is hard and I give them that.
The problem, however, is being spoken of in another light. The "hawks" are beginning to say that the Fed must move in order to provide itself with future ammunition in the future if the economy falters. Say what!? A 1/4% isn't ammunition; it's less than a single cap for a cap pistol if they make those things any more, what we as kids used whilst playing Cowboys and Native Americans. Nah, come to think of it there's no way they are still making those things. Now if you were to boost the discount rate by 2-3% you would have some ammunition but you would also have one hell of a recession overnight, so what is the point behind that point? In any case I'm pretty sure the issue was decided last week by the Chinese and what increasingly looks like a bad set of economic numbers that may be coming out of China, which, by the by, are being discounted by the star gazers as being relatively unimportant to us because we don't sell that much to China. That China's economic situation may be quite important to the rest of the developed world and vitally important to the emerging economies--whose markets have lost over a trillion dollars in investment in the past 12 months--seems to have been missed. And speaking of China, Chrissie, from some choice vacation spot I suspect, let it be known that the Fund will not be adding to the list of currencies available for Special Drawing Rights this year (as predicted right here two weeks ago) which means bye, bye Yuan for a time or at least until Chrissie can get the hell out of there and run for President of France. In short, The Inner Kingdom is going through a rough patch as of late.
A funny thing happened right after the release of the Fed Minutes. Equities, which had be in the dumpster all day suddenly shot up into positive territory, I guess on the belief that free money was still going to around for a while. The 10 year yield crashed to as low of 2.11% which was to be expected and wandered around for a bit. Then, quite suddenly, the DOW reversed and crumbled again finishing well down for the day. It was although the street couldn't figure out this news which was quite unexpected, but originally thought it to be good until it realized that what was going on East of Suez wasn't very good at all for anybody and moved accordingly. If there is one good thing in all of this is that perhaps the markets are taking a closer look at fundamentals rather than spending all their time Fed Gazing. If that is so, wouldn't it be a good time for the Fed to begin to figure out that what they had ain't working no more and that it may be time for an attitude that encourages the fiscal side and the politicians to start doing the job for which they are being paid. Probably far more for which one can hope.
It's still August and there are a lot of players away from the ball park, but things are getting a little tense. There hasn't been much by way of good news as of late and now we are running out of places to look for the same. One good piece came yesterday from Martha's Vineyard where Pres. Clinton and Il Duce were playing golf. Apparently, no one as killed or seriously injured. Maybe there is hope.
I hope this prints. I still have no idea of what went on.
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