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The Mystery Of The "Missing Inflation" Solved, And Why The US Housing Crisis Is About To Get Much Worse

Forget about a housing recovery: for the vast majority of Americans, the housing crisis is about to get worse. Much worse.

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Key Events In The Coming Post-FOMC Week

In the week following the Fed's admission it is not only market-driven but now has a 4th mandate, which is to respond to China's hard landing on a day-to-day basis, US macro events mecrifully slow down to give everyone a chance to digest what the Fed just did. Here are the highlights.

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"Blood In The Casino Like Never Before" - Riding ZIRP Into Monetary Central Planning's Dead End

What the Fed really decided Thursday was to ride the zero-bound right smack into the next recession. When that calamity happens not too many months from now, the 28-year experiment in monetary central planning inaugurated by a desperate Alan Greenspan after Black Monday in October 1987 will come to an abrupt and merciful halt. Yellen and Co should be so lucky as to only face torches and pitch forks.

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Moody's Downgrades France, Blames "Political Constraints", Sees No Material Reduction In Debt Burden

Citing "continuing weakness in the medium-term growth outlook," Moody's has downgraded France:


Apearing to blame The EU's "institutional and political constraints," Moody's expects French growth to be at most 1.5% and does not expect the debt burden to be materially reduced this decade.

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Hawks, Doves & Chickens

The Fed remains in a box of its own making. We are beginning to doubt whether central bank will ever be hike rates again voluntarily. What is however eventually highly likely to happen is that the markets will force the Fed to act – or as Bill Fleckenstein puts it, “the bond market may take the printing press away from them”.

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Global Stocks Slide, Futures Tumble On Confusion Unleashed By "Uber-Dovish" Fed

What was one "one and done", just became "none and done" as the Fed will no longer hike in 2015 and will certainly think twice before hiking ahead of the presidential election in 2016. By then the inventory liquidation-driven recession will be upon the US and the Fed will be looking at either NIRP or QE4. Worse, the Fed just admitted it is as, if not more concerned, with the market than with the economy. Worst, suddenly the market no longer wants a... dovish Fed?

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The Fed's Long Awaited Decision Day Arrives, And Chinese Stocks Wipe Out In The Last 15 Minutes

The long awaited day is finally here by which we, of course, mean the day when nobody has any idea what the Fed will do, the Fed included. Putting today in perspective, there have been just about 700 rate cuts globally in the 3,367 days since the last Fed rate hike on June 29, 2006, while central banks have bought $15 trillion in assets, and vast portions of the world are now in negative interest rate territory.

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Fed Enters Rate Hike Meeting With First Headline Deflation Since January

As the final inflation data before the FOMC decision, some have argued that this print matters most as an excuse to stay in 'emergency mode' - perhaps they are right. Consumer Prices dropped 0.1% (as expected) in August - this is the first 'deflation' since January - great news for consumers. Gasoline and airline tickets saw the biggest drops dragging down YoY CPI but The Fed will shrug its "transitory" shoulders but ex-food-and-energy did miss expectations, rising 1.8% YoY (against 1.9% exp). Notably food prices rose 0.2% in August, driven by a surge in egg prices. So WWJYD?

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China Plunge Protectors Unleash Berserk Buying Spree In Last Hour Of Trading As Fed Meeting Begins

Ffor whatever reason starting in the last hour of trading and continuing until the close, the Shanghai Composite - after trading largely unchanged - went from red on the day to up 4.9% after hitting 5.9% minutes before the close - the biggest one day surge since March 2009 - and nearly erasing the 6.1% drop from the past two days in just about 60 minutes of trading, providing a solid hour of laughter to bystanders and observers in the process.

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Separating Fed Delusion From Reality: The Environment Is Fraught With Risk

The data continues to suggest that the Fed is contemplating actions inconsistent with those they have taken in the past. It is possible the Fed is motivated to increase interest rates to support the illusion that their higher interest rate projections and rosy economic forecasts are finally coming to fruition. It is incumbent upon investors to separate illusion from reality. Investing in such a misunderstood and distorted economic environment is fraught with risk especially for those failing to grasp this reality. While current Fed monetary policy is clearly unsustainable, the Fed runs the risk of severely damaging asset markets with any deviations from such policy.

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China Stocks Drop Most Since Late August, BOJ Disappoints Bailout Addicts; US Futures Flat

Almost two weeks after we explained why any hope for a QQE boost by the BOJ is a myth, and that any increase in monetization will simply lead to a faster tapering and ultimately halt of Kuroda's bond purchases the market finally grasped this, when overnight the BOJ not only did not easy further as some - certainly the USDJPY - had expected, but kept its QE at the JPY80 trillion level and failed to offer any hints of further easing that many had hoped for, pushing the Nikkei down from up almost 400 point intraday to virtually unchanged and sending the USDJPY back under 120. JGBs also traded lower on concerns there may not be much more QE to frontrun.

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