Spot The "Data Dependent" Fed Policy

Tyler Durden's picture

"Data dependent" or "making it up as they go along?"



JPMorgan notes,

Last week's deluge of data provided a needed update on the state of the U.S. economy, specifically with GDP confirming a reacceleration in growth during the second quarter and the employment report pointing to continued tightening in the labor market. Additionally, the FOMC statement was more eventful than anticipated, with important changes to qualifications on the labor and inflation markets.


As the chart above depicts, looking at a variety of metrics including payrolls, the unemployment rate, initial jobless claims, quit and openings rates, and wage and inflation acceleration, Federal Reserve tightening may be warranted in the near to medium term.

Source: JPMorgan

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fonzannoon's picture

They are going to raise rates.

lasvegaspersona's picture

and kill the government?...don't think so....but I was wrong about QE forever (I think)...I believe they will keep the 10 year below 3% at all costs. If they do not it gets bad for the government very fast. The 'budget' already is hurting due to the lack of Social Security money coming in (not to mention the amount that now must be paid in excess of what SS from current workers brings in). Having to pay more interest on bonds would set the Doomsday Clock ahead several hours.

The world, as of Fridays Russia/India currency swap deal, is now almost 100% prepared to do business without the dollar (and SWIFT pretty soon). I think will might see a drop in the dollar index as the dollar simply atrophies from lack of use.

The world is tired of the USA. Tired of wars, tired of sanctions, tired of silly rules tired of the exorbitant privilege. It apparently will not sell off bonds and actively kill the dollar but it seems perfectly willing to just stop supporting the dollar with ongoing bond purchases.

For the brave of heart and truly interested...Fofoa's latest piece is a masterpiece on the history of the monetary system over the past 70 years. If he were doing PhD work this could be his tesis. It is a long hard read if you don;t have background but if you want to understand whast is happening in the monetary system, backed by facts and not just wild supposition, it is very worth the investment. It is called The Dirty Float....

wallstreetaposteriori's picture

it even beyond killing the government..... how about killing the full of debt average person/consumer who keeps the economy trickling along.  Rates go up and they are fucked, then the government, then the markets.  

Nick Jihad's picture

I don't think so, because the average person is not paying 1% cost of funds. Even ARMs are at 3%, so a 1% across-the-board rise in interest rates only increases their cost by 33%. And other consumer debt is at much higher rates.

Stoploss's picture

Look!!  A Leprechaun!!!

IANAE's picture

Based on 'eyeballing' the historical correlations, looks tightening was warranted about 4 years ago...

Stuck on Zero's picture

Enging the Fed 100 years ago would have solved the problem.

NaiLib's picture

When rates go up - End of buy backs

max2205's picture

AIG just did $2 billion. ..and fhey are broke even though the stawk is at $54


What a world

SumTing Wong's picture

It flatlined all right. Good eye there, doctor. Good eye.

Of course our government will blame it on Ebola, and then they will quarantine all of our asses.

youngman's picture

I still do not think they can raise the rates....even if they will kill the USA debt ratings....CNBC had a segment on inflation and how many big companies are raising prices...8 to 10%...that is much higher than a 2% read the Fed seems to have...

disabledvet's picture

Can't say this was the plan but the result of all this "Fedgineering" has been to create AND SUSTAIN huge carry (Ted spread) which to me has been the primary driver of equity prices in spite of an absolute lack of any meaningful economic recovery (in fact we are in a recession) whatsoever.

Again..."speculators paradise" and "short at HUGE risk."

Bernoulli's picture

The whole raising rates discussion is totally useless:

1) The totally not manipulated labour market data will deteriorate (how convenient!) and stock "markets" will crash well before mid-2015.

2) This will lead to a balance sheet and bank massacre world-wide. No bailing out possible what so ever. Don't even try.

3) The remaining "cash on the sidelines" will be pouring into hard assets inflating prices to the moon.

4) Additionally, the FED reaction to the massacre (even more printing) will lead to loss of confidence in the USD and other fiat currencies.

5) Nobody will lend any money to anybody for less than 10% annual interest rate (paid upfront in cash? or in gold coins?). And certainly not to the US government....

--> Conclusion: No need to discuss "raising the rates". Sorry guys and "girls", it's not in your hands anymore.


TeethVillage88s's picture

Correct me here...

I agree with what I think you said about charging 10% if I loan to anyone, especially a government.

I was saying this like in 2004-5 seeing the 2 Wars and all the money spend by Federal Government, knowing that Veteran Benefits don't grow on trees, that US Rebuilds with loan money, that Military Equipment has to be re-purchased, re-built, or re-designed after a war... and who the hell thinks they can sustain a war 7,000 miles away from the source of Troops, Equipment, & Supplies. There ain't no War Chest these days.

But why the hell would a Government or Bank buy US Treasuries for 2.5% or lower? AAA Rated, then I want 6% Minimum and if Debt to GDP is over 101% now, then I want 10% on a US Treasury.

Bernoulli's picture

Yes exactly.

One morning - suddenly - this will be the case (again).

stu11's picture



The stock market has been fabricated since lows of 09, maintained by software, without any fundamental basis.  Your supposition is that now fundamentals will matter?


What would benefit the Fed, Treasury, White House (Democratic National Committee), or large banks/corporations with a large drop in value in the market?


Large ammounts have been lent at near 0% for large corps to buy back their own stock.  Now Fed allows those loans to crash with market?




oklaboy's picture

and considering the present day and age version of perception and facts, really what does it really mean?

LawsofPhysics's picture

Things "uncoupled" in 2008?  < shocker >


The fact that anyone had any faith in the dollar "credit" post 1971 is still amazing to me.

moneybots's picture

"Data dependent" or "making it up as they go along?"


Dependent on data different than in the chart comparison. 

Duffy's picture

fuckin' nonsense.

AdvancingTime's picture

America imports around five hundred billion dollars more from other countries every year than they export. This means we have a giant trade deficit, when we add this to our enormous government deficit it is easy to see that we are living far beyond our means. The Fed has been superbly entrepreneurial when it comes to Ponzi schemes or pseudo-economics hocus-pocus that has allowed the current situation to develop.

The Fed  must at some point begin to ponder a real exit strategy and end the massive and corrosive stimulus that the economy has come to expect. To make matters worse little has been done to address our structural problems and make America more competitive, this will massively thwart growth going forward. More on this subject in the article below.