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Hilsenrath's FOMC Preview: "No More Promises, Fed Is Injecting Uncertainty Back Into The Market"
There have been countless previews of the FOMC statement at 2pm today, all of them largely worthless and regurgitating the same exact stuff. The only one that matters, as it is the only one with the explicit blessing of the Fed (see "On The New York Fed's Editorial Influence Over The WSJ") in its attempt to manage expectations: that "drafted" by Jon Hilsenrath. And if what the WSJ economist writes in "Fed to Markets: No More Promises" is accurate, then fasten your seat belts, ladies and gentlemen, because we are about to enter some turbulence.
From Hilsenrath:
The Federal Reserve is about to inject uncertainty back into financial markets after spending years trying to calm investors’ nerves with explicit assurances that interest rates would remain low.
Ahead of their policy meeting that ends Wednesday, Fed officials have signaled they want to drop the latest iteration in a succession of low-rate promises—a line in their policy statement pledging to be “patient” before deciding to raise rates.
The move could be a test for investors. In theory, less-clear-cut interest-rate guidance from the Fed should lead to more volatility in financial markets. That’s because investors will be left less certain about a key variable in every asset-valuation model: the cost of funds.
Funds will "cost"? Unpossible. Clearly this will destroy the Fed's Dow Jones-Data dependent mandate to push forward PEs to 20x to keep inflation at 2% while it reads manipulated payroll data that waiters and bartenders have never had it this good, and believing that the economy is firing on all 9 out of 6 seasonally adjusted cylinders.
Here is a history of all the Fed's failed attempts to show it is now a plaything of a market with the emotional capacity of a 2 year old:
The IMF joins the warning that now may be a good time to buy VIX calls:
Christine Lagarde, managing director of the International Monetary Fund, warned Tuesday that markets could be heading for a repeat of the 2013 “taper tantrum,” in which stocks fell and interest rates rose around the world as the Fed considered winding down its “quantitative easing” bond-buying program.
“I am afraid this may not be a one-off episode,” she said of 2013 in a speech at India’s central bank. “The timing of interest-rate liftoff and the pace of subsequent rate increase can still surprise markets.”
Here the WSJ contemplates yet another indicator which central planning has rendered utterly useless: the VIX.
Right now measures of market volatility are sending divergent signals. Stock-market volatility is relatively subdued.
The Chicago Board Option Exchange’s stock volatility index, for example, has averaged 17 this year, above last year’s 14 but below its average of 21 between 2009 and 2014. The higher the measure, known as the VIX, the more volatility.
At the same time, however, measures of short-term interest rate and currency volatility have picked up, a potential warning sign of tumult to come. Merrill Lynch’s MOVE index, which tracks expected interest-rate volatility, has risen to levels seen in 2013, when the taper tantrum started.
Torsten Slok, chief international economist at Deutsche Bank Securities, said this rate volatility portends broader turbulence. “The risk here is that when volatility goes up in rates it will be spilling over into other asset classes,” he said.
Such turmoil could affect other borrowing costs for U.S. households and businesses, such as rates on mortgages, credit cards and corporate bonds. It could also hit their stock portfolios and 401(k) saving accounts.
Wait... risk, in the market? Is that legal? Why will someone please think of the 17 year old hedge fund manager children in the Inland Empire? How can anyone make money with 0% chance of loss if there is something called "risk" in the market. Surely that is unacceptable.
And indeed it is, as any market tantrum will promptly push the Fed back to its accommodative ways, as Hilsenrath also seems to acknowledge:
Even when officials have in the past tried to move away from telegraphing their actions, they have found themselves drawn back to behaving in highly predictable ways.
In winding down the bond-buying program known as quantitative easing in 2014, for example, the Fed said the pace of its actions would depend on the performance of the economy. Economic output varied sharply in 2014—contracting in the first quarter and then expanding at an annual rate near 5% in the middle of the year—but the Fed reduced its monthly bond purchases in steady increments.
The box the Fed is in "almost" explains why former Fed governor Jeremy Stein, who saw the writing on the wall, got the hell out of Dodge when he had the chance:
Jeremy Stein, a Harvard University economics professor and former Fed governor, sees a conundrum brewing for officials. Even if the central bank says its actions will be less predictable, the market will infer a rate path from its actions. To avoid unsettling markets, he said, Fed officials have an incentive to stick to the path investors infer.
“It is a hard thing to manage. You almost have to psyche yourself up to not worry too much about spooking the bond market,” he said.
It almost makes one wonder when reflating and preserving asset bubbles became the Fed's only mandate...
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"Uncertainty?"
is that what they call that thing they've been injecting?
i'll have to try that one out this weekend...
Hilsenrat, who used to be the little Jew scribe for The Bernank, has been less than exemplary regarding his predictions since Janet "Separated From Woody Allen At Birth" Yellen (aka Bowl Cut Midge Yentl), is trying to reassert his relevance, it would appear.
Follow the paper boy's messaging at your own peril.
p.s. - And make sure you're a "ground floor" investor, with ironclad return of investment clauses, rather than a post-IPO shareholder/bagholder of any "oh, give it a valuation of whatever the fuck" tech companies in dot.com bubble v2.0 (which is remarkably similar to James Cramer's "valuations & revenues don't matter" diaTRIBE during his Winners of the New World garbage circa-1999).
Hoping for a nice silver dip towards 15 even today after the FED statement at 2pm. They've been keeping silver right around the 15.50 mark for several days now and I think it's because they were waiting for today.
Get ready w/ that dry powder if they monkey hammer silver today after this statement. Perfect BTFD opportunity right here if it plays out right.
And even if they don't create a manipulated dip in price, who fucking cares. Buy 20 ounces anyway. This stuff is still on a fire-sale at this level.
Fed is mimicing this scene from The Princess Bride:
https://www.youtube.com/watch?v=U_eZmEiyTo0
@TIS
Have pity on the poor dude...
He's just saving up his sheckels [like Motel Kamzoi] so he can buy a sewing machine & marry Tzeitel & do an honest days work.
After all ~ They're gonna need a trustworthy tailor to sew gold into garments when it finally all goes tits up.
Once people catch-on and realize that everything you say is a lie; the only solution is to stop talking...
The fed has been 'crying wolf' about normalizing rates for ages; nobody believes them anymore.
This is just Hilsy's way of telegraphing that the fed won't be raising rates (because they can't), and has given up threatening to raise rates 'next time.'
@'Pool Shark - spot on
For a change it would be so refreshing if Yellen just stepped up to the mike and said " Aw fuck it. "
and then just turned around and walked away.
Several years ago I wrote an article here that said in so many words that this whole "guidance" and "managing expectations" route the Fed was taking a la giving hard numerical targets for U being the major domo of policy decision malikng was madness. Let's just plain go back to the days of saying here's what's good and bad from our point of view and that any future decisions would be data dependent upon those factors, period. Kinda like Big Paul Volcker. There was no uncertainty and mystery. Paul todja what he was gonna do and went ahead and did it.
It was and is the talking heads that screwed about (like Hilly) wondering aloud for the publish or perish routine. And Jellyn just makes matters worse with her pandering and sissy visions of "I don't know." Further, I I remember correctly, with Volcker, nobody on the Board dared to speak anything but "The Policy". Period.
Here's what's right, here's what's bad and we're gonna react accordingly as data becomes available.
Period
EOC
To the "folks" at the Fed. Grow the fuck up.
"To the "folks" at the Fed. Grow the fuck up."
and grow a 'pair' while you're at it.
Oh, wait; Yellen already has,.. er,.. oh, nevermind...
I used to refer to that as the "black box" of Fed policy decisions in the old days. All this bullshit about "openness" and "transparency" that Bernanke started at the Fed is bullshit. Nothing but saying "hey everybody, please front-run me- here's my schedule." And the banks gladly obliged. I'd love to know what all this "transparency" has availed us, other than making us utterly reliant on every word from the Fed's mouth.
NoDebt, I'd say all it has achieved is more confusion than in the old days of trying to "dissect" the Fed's minutes and statements... which was not hard to do if one spent the time to do so. And, that whole first mention by the folks of a target rate for U (let alone any other hard target of any other non monetary demographic (ie reserves, etc.) just took credibility damage to a whole new unprecedented level. They're by virtue of their own "openness" "transparency" and touchy feely niceness of coddling markets has made the old jawboning a fool's tool. They've not only screwed up in policy, but then have managed to jerk off in front of the world by openly displaying their ineptness and mass confusion.
Guess that's what we get when there are all academics and political appointees in charge under the thumbs of their owner bankers.
Volcker had the balls to do what was right.
No White Hat Volckers Around These Days
That may just be the key to getting out of the mess.
A New Volcker to turn back the New Abnormal
Guess you remember the Saturday Night Massacre. Most everybody didn't know WTF to do. I drew a supply and demand curve of/for reserves and said lookie here. Price no fixie (FF rate) quantity is gonna be cut back, so price go uppie. Du-fucking-h
Oh well. All the new veterans of perpetually bullish markets with 3 years experience can handle the next dark cloud, I'm certain.
Where's the adult supervision?
Oh, chatting here.
I am expecting nothing more than additional calming words at 2:00 pm EST, followed by a big queefy as Yellen exits. Our Emperor has decreed that all is good so all must be good and Yellen takes her marching orders from the Emperor...
<--- 'patient' stays
<--- 'patient' removed
------->'patient' is dead<--------
When you are dead you don't know it. It's only difficult for others. Same thing when you're stupid. ;-)
The word is that they're going to introduce a new ' P Meter ' at the announcement today. Then instead of using 'that word' they can just say that the ' P reading' is up or down.
What BS! The Fed knows economy is weakening fast and will make dovish statements.
Every statement that the Vampire Squid makes is meant to deceive and separate you from your money.
They are doing their best to wipe the fingerprints off of the murder weapon and Wall St. is pretending to be an innocent bystander. It all should end just wonderfully.
Only the Fed’s UNCH! rate drama
Is more banal than Obama
Absence of promise
Isn’t a promise
Smart money here is long karma
What is a market...you can be 10 years out of college and think everything is rainbows and unicorns. We are screwed.
Game Over
Federal Reserve blew it by waiting too long
ZIRP and still pregnant balance sheet entering into next recession with usd way too strong
Can't raise rates and outta (QE) bullets
got popcorn?
Convert profits into bullets.
All that 401k money is like a group of monarch butterlies. They are migrating back home as we speak.
If the FED drops the word "patient" and the market tanks then expect the damage control herd to come out and smooth things out with comments. WAY TOO PREDICTABLE!!! FUCK YOU FED!!!
Who needs QE when the bankers and financiers can still access all the money they want for ZERO interest!?!?
Sweden went full retard ZIRP today.
Banks get paid to sit on deposits.
ZIRP-A-DERP-HERP
Why do they occasionally let Gold get to $1300/oz? So they can slam it back down under $1200 again.
Why does the Fed raise rates? So they can slam them back down again later.
And the Fed is NEVER out of QE. They'll buy anything if they need to. Junk bonds, penny stocks, accounts receivable straight out of S&P 500 companies' balance sheets.... trust me, they have not yet begun to monetize.
Thanks for that..!!
"accounts receivable straight out of S&P 500 companies' balance sheets"
Sadly, that's probably what QE5 or QE6 will entail.
I think I'll need a double dose of Prozak today.
The Fed is the most imporant market maker for stawks.
The company, industry, earnings? forgetaboutit.
hahaha.......
Where I come from that call that a cluster phuck..... so how's that QE working out for you America?
How's the Q€ working out too? Pretty much a face plant from week 1.
Because what every trembling fawn market needs is to be bitchslapped across the face.
"It almost makes one wonder when reflating and preserving asset bubbles became the Fed's only mandate..."
Well, even Greenspan admits to it, so I'm guessing it was quite some time ago.
Hahaha... yeah, it was 1987 when Greenspan took office. He knows better than anyone.
The Fed finds itself in the same conundrum as parents of an unemployed 30 year old spoiled brat they paid all the way thru college and is now sitting on the couch watching TV and eating up all your food all day.
How old is your boy? He just turned 360 months old! He looks so cute on the couch all curled up with his thumb up his ass.
Seat belts don't work so well at 45K ft.
Oh, you're serious. Then let me laugh even harder.
The FED needs to drop "patient", otherwise they admit defeat of 7 years of policy blunders. They can claim success just before we move into recession.
This shit show will continue until it physically can not. Yeller will be patient today and forever until the dollar crashes.
One does not inject uncertainty into anything, that implies just another form of control. Certainty or uncertainty from a psychological standpoint comes from the individuals perception and that is ultimately driven by knowledge and knowing. Adding a random number generator into your faux virtual markets to make the algos more random and therefore perceived as humanlike is not injecting uncertainty when random number generators are not completely random to begin with and very exploitable unless done via a quantum computer(s). It is perception front running propaganda digital style, like they do now with the 'financial news' which the algos trade off of.
"Injecting Uncertainty" Translation: we have no fucking idea what's going to happen.
Thar she blows!!!!!!!!!!!! The problem is the fed can keep the markets going upward by just typing on a keyboard these days. This is all that matters anymore because the dumb down people think the markets are the economy. Many but not too many people know the difference. If the markets take a serious nose dive they simply shut them down unless the markets are headed higher. Every time the markets start headed down with real numbers they will simply rinse and repeat. The fed will then get on its systems and buy the whole dam thing.
Around the world if you seek knowledge the world knows we are basically fucked and they are moving into new fiat currency systems. Of course in the end all fiat fails. QE around the world solves nothing.
All I can do is make all I can and trade it for tangible assets and even then you may lose that. The world is fucking crazy now.
After turning all of our economic power over to the unelected 4th branch of government- we now wait on their very choreographed words to include the word "patience."
This is how fucking insane we have become. You cannot make this shit up.
Who is this guy and what did he do with Jon Hilsenrath? Is the bull trap snapping shut?
Retail is back in, time to fuck them for a third time.
Gold. 10,000 tons. Credibilty. Backing. Shift away. China. Russia. Aircraft carriers. DF-21's. SU-35's. South/East China Sea. Mariupol. Syria. Drones. False-flags. USA!!! USA!!! USA!!!
They all sorta go together, no...?
Here is the real problem They own the bubble.No way out.
Taper sure surprised me. I was one hundred percent long Treasuries at the time and got crushed.
Not my first rodeo though. Could have screamed bloody hell at the Fed and their "forward guidance" meme that now had been obliterated...instead I thought about the IMPLICATIONS...and held my cards tight.
The short sellers have been annihilated yet again.
I have missed out on some truly impressive equity returns...and of course I look forward to a true Anglo Saxon recovery...SOMEDAY.
In the meantime this is my existence....I have to have at least a grasp of reality.
I have no idea what Washington or Wall Street is doing. Looks to me like they spent tens of trillions of dollars losing a war to the Taliban to me.
"They will always have Judea" of course....
Hilsenrath is the Federal Reserve's Igor in their Frankenstein economy.
Making the Fed a joke. Federal Reserve funhouse full of smoke and mirrors.
cork the arsewhole!
In the old days, prior to every Fed announcement, people would bet on whether the rate was ticking up or the rate was ticking down. It was a game and some people won and some people lost as the Fed ticked the rate one way or other at every meeting.
Somehow now, all will be lost if the Fed makes a statement that it might tick the rate 6 months down the road. See Wussification of Merica.
Hilsenrath looks like turbotax timmy's cousin
mere words, talk, and conjecture will not bring lower stock prices. btfd.
All I can say is FUCK the Fed! It's not working you morons.
THE FED IS PATIENT. CORRECTION THE PATIENT IS DEAD.
+1
dupe
And the stench is becoming unbearable.It only looks alive because of the writhing maggots,
otherwise known as the FOMC.
those maggots ARE THE FED
If the Fed changes ANY wording this meeting the Euro and Yen will crash a horrible death.
NIce bit of double bluff. Spook the market a little so that when the annoucement comes in, we have lift off. BTFD.
Patience.... (exit, stage left)
Data dependent... (enter, stage right)
Blah, blah, blah... they won't dare take away the punchbowl. The fed's third (and most important) mandate ever since Greenspan's tenure started in the late 1980's has been to prop up markets. Full employment and stable prices have been the moving goalposts to justify their actions.
Time to end the fed. And maybe lynch a few fed bankers to make a strong point of it.
The world is waiting on word from a Jewish grandmother before the next breath...amazing
Hilsenrath, eat a bag of dicks!
-Everyone except Obama! He'd like to share them.
The Fed is most assuredly trapped. The real buggaboo is the rise in the dollar, being a symptom of a global collapse it has no power to address, and which is also accelerating the growing move away from the dollar as a world reserve currency.
Ironically, it can, yes, raise rates a smidgen or more, in theory, but this would/will --among a host of other effects-- merely serve to exacerbate and accelerate the very rise in the dollar that is destroying its global standing: a classic catch-22.
not really...they can go full retard NIRP and another $100 trillion in printing over at the news Treasury....THE FEDERAL RESERVER! Serf-On!
"not really"? You're living in a bubble with a reflective interior. The Fed is embedded in a GLOBAL economy. From the inside, it may look as if they have an unbounded discretion to do whatever they want, but are actually in a battle for turf. And they are losing this battle due to the very methods they have been using to this point. They are now therefore merely fighting for air, have run out of options, and can no longer engage in their previous tactics. We're in the end game.
have you looked japan's balance sheet? And they are the reserve currency
I wish there was market to force them from destroying the future
There is; it's called the market in precious metals.
> firing on all 9 out of 6 seasonally adjusted cylinders
classic!
Hilsenwraith - messenger of the undead.
You know it’s all rigged and manipulated when a step in the direction of normalcy is perceived and pitched as an injection of uncertainty and risk.
But, I’m guessing it was Goldman that was running out of patience:
“Hey Janet, we need a little more uncertainty, risk, and consequential trading activity if we’re going to make bonus this year”.
FUBAR
What a sad sack economy where even talk of a 0.25% rate increase is considered to cause market dislocations