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Hilsenrath: Fed Doesn't "Demand" Wage Growth Before Rate Hike
If last week's shocking crash in the Employment Cost Index (ECI) to the smallest increase on record, was enough for some to seal the deal that the Fed will not hike rates for the balance of 2015 (and perhaps ever), here comes the Fed's unofficial mouthpiece, WSJ's Jon "Stingy Consumers" Hilsenrath, to debunk any such speculation with a note which likely came straight from the Fed titled the "Fed Doesn’t Demand Wage Growth Before Increasing Interest Rate."
Here is how the Fed is willing to goalseek its constantly shifting "data dependency" just so it can hike rates at least 1-2 times in a rerun of "ghost of 1937" before it can then unleash a repeat of the "1939" scenario or worse.
Federal Reserve officials have fuzzy views on how wage growth fits in with their objectives for the economy. They would like to see wages growing faster. It would give them confidence that the economy is closer to their dual goals of producing healthy job growth and modestly rising inflation. But the linkages between wages, jobs and inflation are unclear, and so they’re not banking on faster wage growth materializing.
It gets better: the Fed which has been "convential data dependent", is now suggesting the conventional data has been all wrong.
In classical models of the economy, as the unemployment rate falls, slack in the job market diminishes, producing upward pressure on wages. Because wages are such a large component of business costs, wage pressures in turn get passed on to consumers in the form of higher consumer prices. But a growing body of research suggests the economy hasn’t been working like this for decades. Other factors — including global pressures, in addition to household and business views about the stability of inflation — have large effects that potentially outweigh any impact from domestic wages on prices.
Enter the goalseeked "explanation" why suddenly wage growth does not matter:
A recent paper by Fed board economists Ekaterina Peneva and Jeremy Rudd finds little evidence that the ups and downs of wages had large effects on broader consumer price trends either before or after the 2007-2009 recession. “Wage developments are unlikely to be an important independent driver of (or an especially good guide to) future price developments,” they conclude.
So what would the Fed want you to know as a result of all these conflicting data points? Here is the mouthpiece again:
Ms. Yellen said explicitly in that March speech that she is prepared to start moving interest rates up even before she sees sure signs that wages are rising faster. “That said,” she added, “I would be uncomfortable raising the federal funds rate if readings on wage growth, core consumer prices, and other indicators of underlying inflation pressures were to weaken.”
Given her stance, Friday’s employment cost report doesn’t look like a deal breaker for the Fed in its long-running debate about when to raise short-term interest rates. Wages appear to be stagnant but not clearly weakening, which is what she set out as her threshold for not acting. Still, it creates new doubts for officials and doesn’t help them build the confidence they’re hoping to build that the job market is nearing full employment and inflation rising toward 2%.
The September policy meeting is thus shaping up to be a cliffhanger for the Fed and markets. Officials could decide they want to take a bit more time to makes sense of all of this. Still, other evidence could emerge before then that convinces them to look past the report and act on rates. This coming Friday’s jobs report, and its measures of average hourly earnings of workers, now becomes all the more important for the Fed in its continued search for evidence that the economy is truly on the mend.
So another "most important jobs report ever" coming up. Great.
One thing that Hilsenrath did not touch upon however, is that there are only 3 months left before it snows. And everyone know by now the Fed never hikes when it snows. Inquiring minds want to know how the climatic conditions factor into the Fed's thinking. We are confident Jon can relay the Fed's position on US weather forecasts shortly.
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Oh shit....more snow...
If you don't want to invest money into anything that is currently in a bubble and subject to reversion to mean, what do you invest in?
Bonds? Nope
Stocks? Nope
Real Estate? Nope
Snow. Invest in snow.
There is a hefty demand for that snow from them Wall Street types. Hookers also like to blow snow along with blowing other things.
They will be more likely to blow when you provide them with snow, you know?
Other than that.,..JANET RAISE THOSE RATES AND CRATER THIS ECONOMY. YOU CAN DO IT.
In that way the demand for snow will grow as you all well know.
This time the FED will blame EL NINO rains in California for the slowdown in the economy. Always some excuse for a sorry economy.
Oh chit, no time to prep.
We're going to Raise Rates.. (I Swear to God!) sure you are...
ELEPHANT IN THE ROOM - LOOMING PENSION FUND CRISIS - YELLEN IS UNDER PRESSURE TO DO SOMETHING...
Oh vey.. what shall i do...
Sept 2015: Yellen announces first official rate hike in over 7 years. Yellen raises rates by 1 basis point. Announces the Fed will raise interest rate by one point every fed meeting. In about 2 years the Fed will have raised rates by 25 pts.
What a bullshit artist
Well if you LIKE your bullshit artist, you can KEEP your bullshit artist, I say.
The Fed's whore lying desperately to keep the notion of the Fed hike in September alive and dollar strong, even as China dumps Treasuries at a record pace.
Some how 'The Fed' is trying to let some gas out of the bubbles it has created.
Hillsenrath is a prettier spokesmodel than the chairman, but ineffective.
End the FED jail the FED Governors and their crony politicos.
We have the law of #'s working against us, a couple of us are a whittlin it down though.
these stories by JH are the trim tabs used by the fed to fine tune market moves....and counter sentiment.
we're all central planners now....
The key is to infer consequence without consequence ever occurring.
Like the spoiled brat who is constantly being threatened with a spanking, yet none ever comes. Every threat is given a wink and a nod. We know that they believe that they can maintain this charade through manipulation of not just economic data points but primarily through blowing steaming hot farts into their confidence balloon, while all aboard comment on its sweet smell. How long will we deny the smell of shit? when we are ankle deep in it, or to our necks?
Yet our gvt believes it's shit don't stink, and once proved wrong they go into a deep denial and refuse to talk any further about it but have no problem creating a destruction of war to any who oppose it's views. They have created a tax policy which only leads to more taxes, this done over a 130 year period has lead us to where we are now, beyond unsustainable and a gvt default being the only answer, the question now becomes.When?
The elephant in the living room is the USD.
If yellen influences rates up, the USD rockets beyond par with the Euro - an ugly scenario for the US and barry the communist.
While there is a demand for USD, rates will remain low - why would the US Treasury want to pay a higher coupon rate if they didn't have to?
So yellen is sidelined making useless speeches while greater demand pours in for the USD.
Rates will remain low well into 2016 - and Hilsenrath can go fuck himself.
"Sir, does this mean Ann Margret's not coming?"
"Well, Pilgrim, only after you eat the peanuuts outta my sheeeeit"
The FED has run out of options to continue the ongoing Ponzi scheme.
They know, if nothing is done, the collapse is nigh, so their only choice is to hold their breath, increase rates and hope they can pull a rabbit out of their ass.
That about sums it up.
You forgot the part about lying.
You forgot the part about lying.
double entry
double entry
The WSJ fires Pedro and instead give us garbage pieces from that sorry assed Hobbit licker? Zero credibility.
That is one Fugly picture of Mr Yellen
hey like dude, like fuck man, like this is the shit, like ya know, chromecast is a piece of shit software, dongle, whatEVER and like, dude, like it dont even get anywhere near tying the room together and like, Walter!, really man, this piece of shit is made by a duffus stock...really man, its called GOOG and fuck man like its $700 a share and, well, it was $700 and like its... I can sell this fucker short for $625 right now. This is one piece of shit stock, its got a web thing thats even worse than microsoft...fuck man...here...I tell you...I ring my broker...I say sell GOOG short man....and like he gives me 625 bucks...beats bowling
What about excess reserves, and the interest still being paid on them?
i wanna dip my bald head in oil and rub it all over yellen's body... [/jon jon]
+1
Your previous comment about a "Hobbit licker" now makes perfect sense. Little slow on the uptake this morning. Too funny.
Interesting. Very interesting. +1
Leaking report early to algos runners guaranteed.
We can always ship bottled snow to California at a premium.
Freeze dried snow in mylar is lighter and easier to ship.
still on track for sep hike, good to know
Bees make honey,
Banks make money,
Rates stay at zero,
Yellen's a hero.
Rates won't be raised until April 2016, at the very earliest. Banks are still offering 0% credit cards to people with FICO scores under 650. (I know, I'm one of them).
Keep those rates near zero, asshats. I - and, I'm sure other people with brains - will use the free money for whatever purposes we like (I bought RE, PMs, and survival gear).
FUCK YOU, Hilsenrath, Yellen and al the other dimwits.
Disclaimer: got my score up to about 700, got scads of 0% interest offers, took them, used them, continue to now pay them down, credit score down to 650 because, as the trio of scammers (Equifax, Experian, TransUnion) say, I've used too much of my available credit. Assholes. When I'm done with these fuckers, owing ZERO at ZERO% interest, my credit score should be 750 (haven't missed a payment in 20 years), but I'll never borrow from them again because they are the scum of the earth.
Well, maybe I won't...
It must be nice to live in a fail up world when you're connected. I especially love the Bulltards comments about a September rate hike. This from the man that 10 months ago panicked and pulled out the QE4 card when the S&P was a mere 10% lower.
hey so when all shit goes down are we looking at a bladerunner world or what - how fucked up is this sht goona get bro? like what the fuck is gold and silver gonna do for you sad overweight screen jocks?
Janet "the wadd" Yellen........
"I won't cum in your mouth, I promise, no really, we're gonna raise rates"
Maybe the Yellenk feels that if they dont do something to prop up the $, the whole $ reserve currency farce might falter... and then, the US would be done for.
"Winter is coming" is the new "folks".
This is RIDICULOUS
ITs not about raising rates. We know the stock market will crash either when, before, or shortly after they raise rates because they caused its bubble!
So why not do it now. Get it DONE!
Because at this point they are doing HUGE DAMAGE by curtailing a functional monetary MARKET for 6 years and counting.
It is distorting markets. The economy is growing again ...because that is what economies do when they are rock bottom.