Janet Yellen

Today, much of the world turns its lonely eyes to the Fed and its chieftain. The Fed has as much as promised to make the blind see and the lame walk. It claims that it – and it alone – is capable of improving the U.S. economy and, by extension, the world economy. People will earn more money. They will live better. And they will have less to fear from financial calamities, such as those that happened before the Fed was set up in 1913. In the popular mind – if there is such a thing – it is further believed that the Fed “won’t allow” a major bear market, because “it would be bad for the economy.” The Fed rules the entire universe of commerce, finance, and investment. Janet Yellen rules the Fed. But who rules Janet Yellen?

• Wall Street Has Doubts About Fed Lifting Interest Rates (WSJ)
• Global stocks at three-week highs as Fed decision looms (Reuters)
• Charting the Markets: The World Awaits the Fed (BBG)
• Powerful quake off Chile slams waves into coastal towns; eight killed (Reuters)
• As Fed Storm Brews, Europe Stocks Seen Weathering Turmoil Best (BBG)
• Fiorina's rise adds another insurgent to U.S. election fray (Reuters)

In the end, whatever the Feds announce at 2PM NY time today should not affect your long-term outlook on markets as neither of the two possible decisions will significantly alter the future fate of global markets. Instead, the most important thing to understand is the massive fraud that is systemic in the global financial system and to allow a deep and complex understanding of this fraud to drive your investment decisions.

Blankfein's biggest nightmare? "The image of Trump "with his finger on the button blows my mind," he added, drawing laughter from the audience." Surely a far scarier prospect for Blankfein and his peers is coming to Washington after the next crash and demanding another bailout, and coming back empty handed.

Will Janet Yellen proudly put the Fed on the side of the angels, announcing that she and her crew have decided to move the Fed’s key interest rate to a more normal level… regardless of how much it costs the cronies? No, she won’t. Once you begin manipulating markets, it’s a hard habit to break. After nearly seven years of emergency financial policies, we are now in a permanent emergency..."What if they say it’s my fault? What if they call it the Yellen Depression? Oh, no... It’s not fair... It’s not fair... Boo-hoo... sob... sob... I should have stayed at Harvard. I’d have tenure. I’d have a nice pension. George and I could go the Martha’s Vineyard in the summer. It would be such a nice life."

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.

Going into Thursday, everyone - and we do mean everyone - is scrambling to predict which asset classes are most susceptible to a Fed hike. Amid the rampant confusion, BofAML asked fund managers to weigh in. Here are the results.

It appears that the Fed no longer cares about doing the right thing for a very simple reason - the Fed no longer is worried about losing credibility. As the following chart showing the results of a survey of 150 institutional RBS clients and investors confirms, two -thirds already believe the Fed has lost credibility.

One of these days, the people of main street will rediscover their torches and pitchforks. But until they do, Goldman has apparently invented still another ruse to keep the Fed doing Wall Street’s bidding, and to thereby keep its wretched jihad against savers fully in force.

48 hours - that's how long it took Citi's chief economist Willem Buiter to issue a report which was just as dire as Daiwa's, but because Citigroup is much more reliant on keeping it traditionally bullish clients as happy as possible, one had to read between the lines to get to the bottom line.  This is Citi's punchline: "A global recession starting in 2016, led by China is now our Global Economics team's main scenario. Uncertainty remains, but the likelihood of a timely and effective policy response seems to be diminishing."

The idea here is that since it costs relatively little to store physical cash (the cost of buying a safe), the Fed should be permitted to “tax” physical cash to force cash holders to spend it (put it back into the banking system) or invest it.

While any moves in the US stock market ahead of Thursday are largely irrelevant, as only Yellen's statement in 4 days will unleash epic algo buying or short covering (yes, according to JPM the Fed statement is bullish no matter what), it is what happened in China that is concerning, because while we had expected Chinese stocks to go nowhere in particular now that index future trading volumes have plunged by 99% or perhaps rise on hopes of even more easing after the latest terrible economic data, the Shanghai Composite dropped 2.7%, but it was the retail darling Shenzhen Composite which tumbled 6.7% - its worst selloff since August 25, while China's Nasdaq, the ChiNext crashed -7.5%.

"More than 96% of respondents to the latest Wall Street Journal survey of 64 economists–not all of whom answered every question–said China’s gross-domestic-product estimates don’t accurately reflect the state of the world’s second-biggest economy. None of the respondents said China’s GDP was expanding 7% or more."

"Our FCI Rule Suggests The Fed Should Think about Easing"...