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Rosenberg's Take On The Discount Rate Hike
David Rosenberg, and several other economists, as well as Steve Liesman, share their first perspectives on the sudden (yet oh so "telegraphed") discount rate hike. David can not be too happy as a tightening policy will likely not be very beneficial to a dated-Treasury long position. The question that everyone is grappling with: if this is a first step to "normalization", with every aspect of the market being abnormal, just how far will the Fed really go?
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Nobody asked "When did Timmay get the phone call from the Chinese about "sitting out" next week's auctions?
And the Japanese may be joining China in sitting this one out due to, well.... oh what a feeling....
When you want US MIL bases out of your country due to higher crime rates, rapes by US soldiers, etc (plus USA owning a few competitive automobile manufacturers)....
It is getting ugly folks on so many levels. Interesting how gold is holding up extremely well after the IMF announcement and then this. Gold might be 'telegraphing' its next move up.
Mr. D. Lama visits the WH next week. A nauseating event for the Chinese dictators. Nothing the Chinese hate more than the perception of being humiliated worldwide. They're funny that way. US selling weapons to Taiwan don't make them warm and fuzzy, either.
They plan a long (bond) vacation.
Heard an NPR blurb that sounded believeable to the effect that the ritual of visiting with the Dalai Lama has been a tradition for several presidencies now, and in the spirit of that tradition the Chinese make equally traditional public noises about being unhappy about it, but in both cases the play is scripted strictly to play to domestic constituencies, both the call and response are entirely by the agreed playbook, and has absolutely zero effect on the "real policies" of the US and China. If anything, the sport is to discern any change in the call and responses from years past to see if there is the barest hint of any policy change. Strictly for those versed in the art of reading the entrails of sacrificial animals, and about as meaningful and informative.
As long as we have a trade surplus with those commie capitalists, they'll buy Treasuries.
Ned,
Most people simply don't understand this concept, that so much of the posturing between countries is for "domestic consumption" in order to reinforce local stereotypes and myths. Once a lie has been told or a position taken, it must be carefully cultivated until some other pretext can be invented to change the public myth to more accurately track the new lie.
You live in a dream world Neo, perpetrated by the masters of the universe. The key to understanding this concept is that WE maintain the dream world by our acceptance of it.
blah blah blah another military basher.
Its going to be fine, its only the "new normal"... the abnormal still has a firm grip.
And these idiots allege that this hike won't impact consumers? Its all that credit card issuers need to jack up variable rates, for God's sake. Does anybody think things won't work out that way? Please.
+1
rate increase anywhere (discount window, fed funds rate whatever) increases cost of doing business for anyone utilizing those means of credit which gets explicitly passed onto the consumer.
"non event for consumer" Rosenberg is a fn moron x10
No No No the discount rate is not impacted by the Fed
reserve rate but the normalized window rate offset by the intra- bank rate divided by the long term bond yield ......
hang on I need another snort of nose candy ........
They blew past all that long ago and headed straight for usurious rates. End of story.
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that's one of the big trades Gluskin has been pushing - Rosie strikes out on his bear calls and now this
more importantly what's up with Bloomberg - check out their live Asia Feed ... Robo material??
http://i50.tinypic.com/2wc4l8j.jpg
http://www.bloomberg.com/streams/video/LiveBTV200.asx
CNBC is sort of like Saturday Night LIve, except it's not funny. Not as accurate either.
Seriously... Maria's voice is the worst. Nasal and whiney... it's like fingers on a chalkboard.
Egg on Face in a few months if not sooner. An while the Sovereign debt crisis is getting into full swing? and more signs of a double dip in housing? While this is not the Fed funds rate, it does cut a little more of the life line to the banks. Treasuries may freak out though in the short term.
Once the fiscal stimulus is done and all the tightening taking place around the world comes to roost, it will be obvious that we are japan.
Funny how the EUR is tanking.
The increase in the discount rate to 0.75% is driven by market realities and a desire to be able to sell US Treasuries as foreign demand falls off.
The bull market in gold moved from $400 to $887.50 in the 1970s as interest rates rose from 3% to 14 7.8% on Ten Year money.
The increase in the discount rate to 0.75% is driven by market realities and a desire to be able to sell US Treasuries as foreign demand falls off.
The bull market in gold moved from $400 to $887.50 in the 1970s as interest rates rose from 3% to 14 7.8% on Ten Year money.
so anonymous ,, your other name be sinclair as you used word for word his post,, .. some would say youplagerized with out acknowledgement.. sort of a scum thing to do,, but you know they all do it.. lol
Citi sent me a notice on my unused credit card for a couple of years that April, they will be adding a $60.00 annual fee for improved service. On the phone and canceled this abomination. Also, got rid of my cell phone, the ATT service rep. said "What, your cell phone is a necessity". NOT!
Yesterday’s transparent attempt by the IMF to scare the gold market down by announcing a sale of gold by European IMF contributors has been a failure. This reminds us very much of the situation in the 1970’s when the IMF gold sale was met with strong demand. When the markets recognized that there was strong demand in spite of the IMF sales, gold moved much higher within a few months.
LMAOL "Won't effect the consumer" What the f*ck is wrong with CNBC shills. Oh yea, everything! The credit card vultures will certainly raise variable interest rates.
The above poster is blatantly misinformed. Variable credit card interest rates are indexed to the Prime Rate (Fed Target Rate + 3.0%). The Fed Discount Rate is NOT an index for any consumer lending rates whatsoever in the market.
good move.. rate increase attract more debt,, system gets even more out of balance ,, plus added costs to carry debt ,
okay that sound s like a good option ...
bury us with B.S.
-always waiting with great interest to see how this kind of thing doesn't work so well for the fed but it's also sad to see what the fed's bungling blunt bludgeon tactics do to the people who have to live within a managed economy.
" ... several other economists, as well as Steve Liesman ...."
LOL!
Yes, we must not forget to mention CNBC's very own FedRes sockpuppet!
Liesman is like one of those old See-and-Say toys --- just set the dial to the appropriate central bankster or other financial establishment figure, pull his string, and hear the gushing praise!
John Harwood is his political See-and-Say counterpart, and just as reprehensible if not more so.
I'm glad we have liesman to talk some sense into people. I meant these little used programs really aren't that big of a deal. They are down from 4 5 7 billion a day to 4 5 7 billion a day.
http://www.321gold.com/fed/temp_bank_res.html
The significance is why intermeeting ? What is the urgency? To get in front of China raising rates? To get in front of bad inflation numbers? Appease Honig? No matter what the spin its clear they had some urgency to make this move pre meeting...
Most likely, it was a test to see how the markets and economy would take the news - an expectations test, to put it succinctly. As others have noted, the discount rate is less significant than the Fed Funds rate.
I think this hike was the telegraphing. Given that two FOMC members were quick to state publicly that it wasn't a real tightening, the planned Fed Funds hike isn't likely to come very soon. It sounded like both Duke and Lockhart were trying to allay a minor panic.
Agree. The shift in discount rate means nothing in strict dollars and sense, and since the Fed does not really give us the "why," especially as to the timing, it is a tool: but I'll add that not only has this been deployed to gauge (and quantitatively measure) the response, but also to to see what rationales are put forth and embraced to explain it, as a guide for future policy statements.
This IS just the Fed's exclusive special bank lending rate.
It ISNT used.
It ISNT the "fed funds" rate... which was not changed.
Short-term Tbills... will not change.
1M LIBOR will not change (might go down)
3M LIBOR might go up a few bps, depending on if this implies a rate hike in the next 3 months. Which I dont think it does.
Some people here dont seem to understand what the "discount rate" is... its esoteric.
Why do this the day before expiration?
+1
Real rates in the 30s hit 14%- that's real rates not coupon. I suspect this is a show and tell event for t he bond vigilantes(china). Give he bondholders what they want! China is in the bad position of being a bondholder and an importer at the same time. What's good for bonds is bad for business. Raising rates will crash the real estate market, hurt the FED agency debt and MBS'S and probably send the stock market and Corp bond market into a hell spiral. More unemployment and less buying of cheap Chinese crap. I'm interested in what happens to gold. I see a quick sell off and then like the 30s and 70s, the gold as liquid currency becomes stronger. 1/4 point will smash the carrytrade but reality says we are in debt and probably default-ready. Japan's debt is internally held by suckers who will not dump. They have no vigilantes. The US is selling garbage to foreign holders and those holders want high rates AND a resurgent consumer market. It doesn't work that way in deflations...
I'm stocking up on cans of beans and heading to my cave. I'd invite you along but I don't think you could suffer my farts.
Leisman, you shill.
The level of discourse and understanding on this site has fucking nosedived. WOW.
i feel like i am surrounded by retardeds. consumer credit, really? fucken amazing.
i feel like i am surrounded by retards. consumer credit really? on concur.
i feel like i am surrounded by retards. consumer credit, really? i concur.
Long bonds up this morning, yields down. Right out the
textbook, boyz
Benny Boy snuffs out the bubble and flattens the yield
curve in one action. He's smarter than I thought.
Punk economy, little inflation, relatively
high long term yields (considering) and now Benny pops the risk trade with a little teeny front end rate increase to bring the carry traders home to Jesus.
Should be an interesting day.
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