Momma always said, "Don't stand in front of a moving train." Everybody read the Fed the same way I did: no more normalization this year despite Janet getting the data she has been talking about for a year and a half. As a result, the DOW jumped over 150 points today bringing it into positive territory for the year for the first time. I guess I should jump in (if I had any money) but I don't and I won't. I'll just stand here on the side of the tracks and watch the big ol' choo-choo roll on by trying to figure out what's going on.
Janet did admit that everything is quite so rosy anyplace else in the world which may be a bit of an understatement. She also was cautious about the U.S. economic outlook to be honest, but the market has appeared to ignore all of this and decided that the good times are back. In so doing it has planted the flag firmly on fortress America, discounting the belief of an increasingly integrated world economy and proclaiming that we can go it alone, swimming upstream against the global tide and choosing our unique agenda. Never stand in front of a train or try to stop a spawning salmon...I hate mixed metaphors.
The dollar of course has gone ker-splat which is good news for the internationals and their earnings. Oil is way up with WTI closing over $40 dollars today despite what people who claim to know about these things stating that there has been no material change in either supply of demand...except for some 800,000 barrels a day that has apparently gone missing. I know, me neither. Gold is way up as well. A hedge against inflation? Cheaper dollar, cheaper price? Beats me.
Then again, I could be all wet in my skepticism and things are really about to get good. If so, YEA! But I just can't get around the fact that we're in step and the rest of the world is out of step. Nor can I figure out the pull back on the part of the Fed when there is certainly more reason today in the data presented for a normalization that there was months ago when it embarked upon this journey. What changed? A lack of confidence in the data or just plain ol' politics in a Fed that we all recognize as being the most partisan in recent memory to the extent that Janet had to answer a question in her presser as to Lael Brainard's contribution to Hillary Clinton's campaign fund which, if you are interested, is to me more tone-deaf and stupid that nefarious. But it does have the effect of putting things in perspective. At least we now have all of the major central banks marching to the same tune. I think I'll get off this macro bus and get on one of the minis in the near future. Maybe a slow train would be better. Yeah, that's a good idea. One of those with cars with see-through roofs where one can enjoy the scenery. Very calming. I like the thought. Toot, Toot.
Showing posts with label Federal Reserve Policy. Show all posts
Showing posts with label Federal Reserve Policy. Show all posts
Thursday, March 17, 2016
Friday, October 9, 2015
LOST IN SPACE
No. I'm not talking about Mr. Putin's ship-fired missiles which, as predicted, didn't like where they were going and apparently killed a lot of cows in Iran...and hit nothing of consequence any where else. I'm talking about that I am out here in the fly-over zone (don't get ideas Mr. Putin) without a thing going on other than another ridiculous interview on CNBC today by Billy the Dud making one wonder whether the guy is trying out for some late night show on CNN where, since no one seem to watch, one can say anything and not get in trouble.
Billy seems to think that if...if mind you...his assumptions are correct, the Fed might be able to raise interest rates this year. What assumptions? Well, continued solid job growth of around 125,000-175,00 a month (he slipped in 200,000 at one point), which has led to unemployment of only 5.1% and which will lead to higher wages and begin to create higher inflation. He was never asked of course if the unemployment numbers were simply crap as
1. 125,000 comes no where near the population growth, and
2. The biggest drop cause of in the unemployment rate is a result of the growth in the decline in the employment percentage which has reached 62.9% indicating a steady increase in the "the hell with it attitude" causing people to drop out of the job market and of course the increase in retirement as one portion of the labor pool ages. Or to put it another way, when a third of the labor force ain't lookin, the percentage of those that are so doing, but unsuccessfully, can easily reach 5.1%
Wage growth is stagnant and likely to remain so and inflation--as measured by the Fed today--is no where to be seen. But Billy was all smiles. Why not? he was on tv...YET AGAIN!
China isn't a direct problem for the U.S. but more so for developing markets which then could impact upon the U.S. economy. No kidding. Of course if the Yuan gets picked up as a reserve currency by the IMF...well, that apparently is not on the radar. (My Really Smart Friend, Larry, thinks that's going to happen by the end of the year by the way. I don't. Let's see who is right). Credit issues: not discussed. Liquidity: Huh? A new QE program for stimulus? Smile. How 'bout some Euro stuff like negative interest rates? Well, sometimes that can be "useful." Huh? Where? Switzerland? In short a perfect interview. What me worry?
The equity guys liked it and kept buying but this is a long weekend and everybody got cautious towards the end. I think there are pretty much square books in everything as it approaches. The event risk is still out there and Mr. Murphy doesn't care about a long weekend break. So, we will keep our fingers crossed for the next three days, enjoy some good college football and root for the Mets and the Cubbies to make it through. Wouldn't that be a kick? Too bad we didn't get a better lead-off batter than Billy the Dud today.
Billy seems to think that if...if mind you...his assumptions are correct, the Fed might be able to raise interest rates this year. What assumptions? Well, continued solid job growth of around 125,000-175,00 a month (he slipped in 200,000 at one point), which has led to unemployment of only 5.1% and which will lead to higher wages and begin to create higher inflation. He was never asked of course if the unemployment numbers were simply crap as
1. 125,000 comes no where near the population growth, and
2. The biggest drop cause of in the unemployment rate is a result of the growth in the decline in the employment percentage which has reached 62.9% indicating a steady increase in the "the hell with it attitude" causing people to drop out of the job market and of course the increase in retirement as one portion of the labor pool ages. Or to put it another way, when a third of the labor force ain't lookin, the percentage of those that are so doing, but unsuccessfully, can easily reach 5.1%
Wage growth is stagnant and likely to remain so and inflation--as measured by the Fed today--is no where to be seen. But Billy was all smiles. Why not? he was on tv...YET AGAIN!
China isn't a direct problem for the U.S. but more so for developing markets which then could impact upon the U.S. economy. No kidding. Of course if the Yuan gets picked up as a reserve currency by the IMF...well, that apparently is not on the radar. (My Really Smart Friend, Larry, thinks that's going to happen by the end of the year by the way. I don't. Let's see who is right). Credit issues: not discussed. Liquidity: Huh? A new QE program for stimulus? Smile. How 'bout some Euro stuff like negative interest rates? Well, sometimes that can be "useful." Huh? Where? Switzerland? In short a perfect interview. What me worry?
The equity guys liked it and kept buying but this is a long weekend and everybody got cautious towards the end. I think there are pretty much square books in everything as it approaches. The event risk is still out there and Mr. Murphy doesn't care about a long weekend break. So, we will keep our fingers crossed for the next three days, enjoy some good college football and root for the Mets and the Cubbies to make it through. Wouldn't that be a kick? Too bad we didn't get a better lead-off batter than Billy the Dud today.
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