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Market Anticipates FED Rate Hike, Despite Collapse in Housing Starts
........Originally posted March 18th - Written by Nathan McDonald for Sprott Money
Stocks are pulling back ahead of a greatly anticipated FED meeting. Investors are holding their breath as they wait for news from Janet Yellen on whether or not the FED will give more indication of future interest rates.
It is widely anticipated that the FED will remove a key word “patient” from its statements. This is in reference to the timing of an interest rate hike and the FED’s previously dovish stance to raise them.
The market believes that the FED will begin more strongly indicating that a hike in rates is on the horizon. Of course, levels will still be historically low, even if a rate hike was to occur, as they are now resting at 0.25%.
That is a big “if”. Although the FED is likely just jawboning and pandering to Wall Street, they themselves have said time and time again that they would only raise interest rates if the economy was recovering and firing on all cylinders. Clearly, despite what the mainstream media would have you believe, it is not.
One of the key indicators that the FED bases economic recovery on is the housing sector. The new American Dream as some call it, others consider it a nightmare.
US housing starts have recently collapsed, shattering the false belief that the housing market was indeed recovering. Housing starts for February collapsed by 17%, the biggest month over month drop since February 2011.
In addition to this, we saw a decline of 184K units, the biggest nominal fall since January 2007.
As usual, the spinmasters are chalking this up to a historically bad winter. Granted, the east coast did see an unusually bad winter. Yet, how do they explain western housing starts which fell 18.2%! 1.2% greater than the average.
The answer is, they can’t. This simple fact will be swept under the rug and the MOPE will continue on as it always does. Perhaps some investors have become wise to this fact and this is the reason why gold and silver experienced such sharp gains as of recently.
Gold experienced a huge $1.2 billion bid, causing it to spike higher, bringing silver along for the ride. While at the same time, crude crumbled, showing the true surge, as gold is typically connected to the price of oil.
Despite a falling housing market and a weakening underlying economy, the FED will very likely do just what Wall Street wants and remove the word “patient” from its guidance. Despite this play on words, the FED knows the true state of the economy and they know that if they were to raise interest rates in any meaningful way, then it would rapidly undo all that they have worked towards since the economic crash that began in 2008.
Perhaps this is the right thing to do, since it would finally cause the market to swallow its medicine and begin the much needed recovery phase. However, if history has taught us anything, it’s that the FED will do anything and everything in its power to keep the game of musical chairs going.
A bigger and greater crash, than we’ve ever seen before is on the horizon. How long until we reach our destination is the true question and unknown, but reach it we will.
........Originally posted March 18th - Written by Nathan McDonald for Sprott Money
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Can't wait for the word cloud
This is getting ridiculous. The market examines every single word to come out of her mouth because the fed controls the entire market.
Even though they know they're getting booed off the stage and people are beginning to lob rotten tomatoes - the Bankers' show will go on - As the smart ones begin preparing for their own depositions.
Watch them all try and prove that they really truley honestly believed in what they were doing and thought they were helping with Gods work and all ...
https://www.youtube.com/watch?v=vn_PSJsl0LQ
'Stawks are pulling back, fearing scary rate hike'....only the most gussied up clowns could believe that's happening at all.
Yeah, "hike" to 0.25, if that. Not so scary.
Set rates to market levels and we'll have worse than scary. But better sooner than later.
Collapse in Mortgage Apps
Collapse of Oil Price
Continuing Collapse of Demand
FAIL! With 7+ billion people all competing for a better standard of living (still enjoyed by a relative few) there is plenty of demand for any real commodities and products that support that higher standard of living. Demand for bullshit paper promises? Sorry, not so much.
tick tock motherfucker.
You know, two or three years from now, these clowns are going to be sitting in the windowless ruin of what was once their home. Huddled around a small fire in the middle of their living room. Cooking what is left of the dog they killed three days ago and say, "You know, I sure wish I'd listened to those guys on Zero Hedge."
...and what is ZH telling us that I should listen to?
we become all that of what we think.