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"Patient" Fed's Other Problem: A Third Of Traders Today Have Never Witnessed A Rate Hike
2014 was "relatively easier," as the pre-determined pace of tapering had The Fed on auto-pilot last year. However, as WSJ's Jon Hilsenrath warns, Janet Yellen ’s job is about to get harder. Hinting that The FOMC is likely to remain "patient" in deciding when to start raising short-term interest rates later this year (and markets have started to price in lower for longer-er following recent macro weakness domestically and abroad). Juxtaposed against a mixed picture of the economy is concerns of being boxed in at ZIRP should another economic downturn arrive. However, as III Associates notes, it is the communications challenge for The Fed that is most problematic, "it has been nine years since the last rate hike, and I’d estimate about a third of those working on trading floors have never witnessed one."
Janet Yellen ’s job is about to get harder after a relatively easy first year as Federal Reserve chairwoman.
She and her Fed colleagues on Wednesday are likely to repeat after a two-day policy meeting that they “can be patient” in deciding when to start raising short-term interest rates later this year—meaning no rate increases at their next gatherings in March or April.
But in the weeks ahead, she’ll face the challenge of forging consensus on whether to formally open the door to rates increases in June.
...
Many Fed officials have said they expect to start raising their benchmark short-term interest rate from near zero around the middle of the year. Ms. Yellen said last month that the “patient” language signals no rate increase for at least two meetings. That means if officials want to signal the possibility of a rate increase in June, they’ll need to alter or drop the phrase at the meeting March 17-18.
...
“These are going to be consequential choices that are going to involve subtle judgment about the economy and market, not just here but abroad, and that is a challenge,” said Lewis Alexander, chief U.S. economist at Nomura Securities.
In fed funds futures markets—where traders buy and sell contracts based on expected shifts in the Fed’s benchmark interest rate—participants have been marking down the probability of a Fed move by June.
...
“The kinds of things we’re observing now—it is not the constellation of data that would be consistent with a zero policy rate. I think it is important to get started and to start normalizing policy,” Mr. Bullard said in an interview last week.
Other officials have doubts. “Based on the data right now I’m not particularly confident [inflation will return to 2%]. That is exactly why I’m willing to be patient,” Boston Fed Eric Rosengren said in an interview. He said he was particularly wary of falling yields on 10-year Treasury notes, a signal that investors don’t see upward pressure on inflation.
However, no matter what, change is not good for the market (as we noted previously). As Hilsenrath concludes, Yellen's first year in office demanded a great deal of planning, but not many nail-biting decisions... now she has a problem...
“The pace of tapering, $10 billion per meeting, precluded any other action in 2014, so last year was relatively easier,” said Karim Basta, chief economist at III Associates, an investment adviser. “The communications challenge of the first rate hike will be substantial in that it has been nine years since the last rate hike, and I’d estimate about a third of those working on trading floors have never witnessed one.”
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Come on Janet, show us what big balls you have, raise those fucking rates.
Thanks, Al. I've got a sandwich riding on this with Doc. And I think I'm going to lose badly. I can use all the moral support I can get at this point.
One word.
China
What? You were expecting "plastics"?
For those wondering WTF that means:
https://www.youtube.com/watch?v=PSxihhBzCjk
I'll take Dustin Hoffman movies for $200 Alex.
Ain't gonna raise rates, FFS.
If they do, then it's Katie Bar the Door.
Just think of the ability of Congress and O'Jammies to lay the blame on the Fed for the shit sandwich.
That'd be suicide by a dull rusty tanto*
* short Seppku blade, not the guy on the white horse's Indian companion, Apooh who sells curry Slurpees
"Janet Yellen ’s job is about to get harder."
You call that a fucking job? I call it a paid vacation.
Janet Yellen’s job is about to get harder? Is there a euphemism in there somewhere? I knew it. They never could have selected a woman for Fed chair.
Begging my other question, a third of what traders exactly? There are people still calling themselves traders? YGTBFKM.
We're gonna blame it on the Algos.....you know there are like what 20 degrees of separation there?
"...there was no way we could have ever seen it coming, our algos were attacked by TEEEERRRRROOOOOIST"
Who made who bitchez!
I may have worded it differently, knukles, but I must concur. With the amount of debt out there any type of increase would surely sink many a ship. The Fed is boxed and it will be interesting the excuse used this fall for not raising rates because they sure are not going to.
Also the article states: "it is the communications challenge for The Fed that is most problematic"
Quite simply, Communications is not one thing, it is the only thing.
John 3:16
She can't for what the $$$ will do immediately afterwards
QE4EVA
funny Al
Al Huxley said: "...raise thoe fucking rates." Exactly.
Nine years since the last rate hike?
Nine years of punishing savers while rewarding parasite banksters!
Nine years .. NINE YEARS without a rate rise. This must be a record of some sort ..OR
Its The Dead Parrot Skit
http://www.google.com.au/url?url=http://www.youtube.com/watch%3Fv%3D4vuW6tQ0218&rct=j&frm=1&q=&esrc=s&sa=U&ei=LnLJVKuAHeK7mQXZ9oLwBQ&ved=0CBUQtwIwAA&usg=AFQjCNEapBy7wECr8Hlqy_AY8I4F28y-LA
It''s her one last chance to get out of this unhanged.
I doubt anyone at the Fed is smart enough to see that. They didn't deserve this chance, but we'll find out soon if there are any grown ups in the room.
They won't be witnessing a rate hike anytime soon, either.
There's a cure for that, and you don't even need penicillin.
I bet a third of the traders have not had a threesome either....MFF....MMM probably
Don't the ALGO's price that in for them?
Most traders are done after a year or so anyway. They either end up in "Merchant Funding" of "The Al Bundy Academy of Sales"
Traders today are Not the traders of yesteryear, when men were men and fucking crazy asses
They're a buncha fucking punks who've ridden a wave of liquidity and not faced a challenge in their lives.... except from their company, being thrown to the SEC as cannon fodder
Couldn't agree more, knuks, but I've been wondering. How do you sell Munis with a negative coupon?
Do you advertise that as triple tax free with a reverse twist and triple sowcow?
Might need a lot of lipstick;)
Would I be able to deduct the interest that I pay as a charitable contribution?
Good question.
Well, they sure as hell hadn't seen negative rates before either!
Go ahead Jan.
Raise those rates...
By June we'll be hearing how they are trying to raise rates back to zero!
That's a very good point Tyler... There's a lot of uneducated young folk that have been indoctrinated over the last 7-8 years.
It's time they eat some ~Brussel Sprouts~ pun intended, and spend a stint on "Reality Ranch". ;-)
"...should another economic downturn arrive..." what? as if one isn't coming if not already here, ...seaonally adjusted, of course.
"...should another economic downturn arrive..."
That's classic
That is a lot of people on one side of the boat. go ahead, raise rates motherfuckers, I triple dog dare you!!!
Student loans... Ohh, by the way, did I forget to mention "Student Loans"?
And the eighteen trillion dollar elephant in the room, 70% odd of which is reaching maturity in the next few years and will have to be rolled over on the new rates.
Lol.
Hey Whitey, that's the next fool's problem.
"it has been nine years since the last rate hike, and I’d estimate about a third of those working on trading floors have never witnessed one."...
Who needs economic fundamentals anyway?!!! Overrated just like Newton's empirical laws of motion!... Just ask the ex-Chairman of the Federal reserve who was an expert on the panic of 1929?!!!
If ever there was a poster child advertisement NOT to get your higher education in science, economics or "law" in the United States since September 2001 these three examples couldn't be more prophetic!
Son
It is easy to blame the players, especially when some are benefitting much and other people suffer. The real problem lies in the very structure of our current monetary system. It has to go before most folks get better....and they'll get much worse first. I see the whole world looking like Greece for a few years and then gradually improving when the world finds a better way to save than storing 'wealth' in pieces of paper that can be created at will.
I know it is good sport to blame the banksters and the Fed and they do perpetuate the system but if they were to stop and things crashed they'd be hung by sunset.
Nope, things must be allowed to decay at a 'natural' rate so all can say they did their best to prevent what is coming. All those paper rich youngsters will be mowing your lawn if you find a better way to save before this all ends.
There were other ways it could have been played when Nixon pulled the plug on gold and Bretton Woods. Also, with Republicrat support, Bill Clinton didn't help with yanking Glass-Steagall, turning bankers and investment houses loose on depositor's money. Actually, you could keep the gallows busy for weeks.
things must be allowed to decay at a 'natural' rate so all can say they did their best to prevent what is coming.
lvp
If what has happened the last 14 years is part of what you call a "natural rate of decay" I'd have to say that you either haven't been paying close attention to what has been happening or you are in on it?!!!
Sorry. Just an observation!
Rising crude prices would pull us out of this deflation...but they keep falling. Today might be their lowest close in years. It all just feels so ...terminal.
it feels like you are at a shit job you have been working for years. underpaid, overworked, abused and so-forth. but now you and everyone around you knows that the employer is going out of business. there really isnt anymore upholding of standards. the guy who sits across from you is stealing the stapler and fax machine. its a free-for-all.
lasvegaspersona wants higher petro prices to pay off his mis-guided mistakes. Let's just call him another Milton.
Milton - Office Space – Stapler scene
1993: Fed raises rates after being "down" for an extended period. Market reacts, the Dow hit with a 200-odd point decline (which was a big move back then,) and the following day, Investors Business Daily's front-page head line: "Why?"
Never seen a rate raise. Heh.
If rates are raised, how can the US Federal debt be serviced? I don't believe it can be.
So, it looks like Eternal QE to me and, if that is so, why does this lady even waste her time talking about rate hikes?
Because that was the script she was handed to read from.
Haha, yeah. Figures...
^_^
They will print money to pay the increase on behalf of the government. The real increase will be paid by debt holders, meaning real, productive, private individuals.
I agree, but won't that crash housing, like, yesterday?
Please advise (with my thanks).
If the boyz are short today, they could make bank if Janet says the right thing - "yep, rates are going to rise, count on it". Janet gets a cut of the winnings put into her Swiss account (or is it Caymans now?)
Fed doesn't set the rate, the market does
http://bullandbearmash.com/about/us-prime-rate/
The Fed buys bonds at lower rates because they are a leg of the US government - arguably the largest issuer of debt in the world
Then it's going to be a Learning Curve.
Slap on a Freescale Semiconductor to every Federal Reserve employee, we can unfold this raunchy bullshit in Wall Street/Washington DC, within days.
Blackstone now owns the patents because a plane went missing, you never take the same commercial plane with your entire staff on board.
http://www.nasdaq.com/symbol/fsl/ownership-summary
<----- rally +100 by 4 pm
<----- rally +200 by 4 pm
Going by previous fed bs..would not surprise me to see nothing really said
Anyone have any idea what the NIM impact would be to the TBTF should rates go up 25bps?
Hey, Vlad jacked up rates in Russia to 17%. They're still OK; in fact, even recovered! Show a little Texas, Janet, and really hit the big time. How about 2%? Since nobody really ever knew what they were doing, why not just toss a coin three times? Tails, no change, heads, 1/2%. Add up the three tosses. That should work.
shes got big balls
https://www.youtube.com/watch?v=gJ3tqIukBKg
Never gonna raise rates, infact rates are going negative.
Unknowingly, you just created a new propaganda acronym for the Central Planners.
NGRR = Never going to raise rates
/LMFAO
for fucks sake already - the white haired evil gremlin can't ever raise interest rates outside of a token 15 - 25 basis points.
the average normalized interest rates is 5%
lets see the dumb heifer and the big eared donkey do anything except jawbone
spending one more second on this dumb fucking subject is a waste.
the feds can't ever raise rates period
Please... The only thing the federal goons are going to raise is a big ol' nigger dick up your ass when you're in prison for excercising your Constitutional rights.
Stan Fischer and Jack Lew's "other problem"!
https://www.youtube.com/watch?x-yt-cl=84924572&v=-AUf3Pgz3WA&x-yt-ts=142...
<---- NIRP
<---- Bank of Sealy
How will you protect your wealth?
When was the last time the Federal Reserve raised interest rates by any significant amount?
I don't think it has happened since I've been 'paying attention'.
Janet Yellen is back already? I figured she'd still be partying over in Europe with her fellow tribesmen over the "liberation" of the HolyHoax camp where the precious Jews were freed from the hoax chambers.
It used to be that you wanted a broker that had been through a Bear Market. Now we have to ask for a Fucking Bankster that has survived a "Rate Hike"????
What a bunch of waste of O2
Stop hiring teenagers.
The carry trade has been turned into an entitlement.
Reminds me of that 18YO kid that posed as a doctor recently.
Biggest question is, have the computer programs ever witnessed a rate hike? Are they even progeammed for things to go down?