This page has been archived and commenting is disabled.
September Rate-Hike Odds Plunge
From as high as 58% probability on Friday, the odds of a September rate-hike are plunging, down to 44% for now... as investors weigh the narrative of a collapsing Chinese economy and currency war turmoil against The Fed's desire to hike no matter what...
Charts: Bloomberg
»
- 10362 reads
- Printer-friendly version
- Send to friend
- advertisements -
those 58% were for fun and giggles, yes?
No fuckin way they're raising rates.
And IF they do, just BTFD!
What are the odds that another 'Intrade' starts-up?...
This is the fakeout before the breakout. A September rate hike is a 100% lead pipe cinch. A mortal lock.
I remember the good ole days in 2011 when the 'experts' talked of a 1st or 2nd quarter 2012 hike. Nope, give em all credit cards at 22 percent interest, cars they can't afford, student loans, home loans- shit, give em new sub prime real estate loans and hike rents, all the while wages fall in a shitty job market.
They'll fuck savers to the moon. Of course, they know they'll need the 10 trillion that have been lost through zirp for their retirement. Unfortunately, most of those poor fuckers will gladly sell the rest of their assets for pennies on a dollar.
The next tanks in the streets moment is here. This time they are better prepared, are you?
HURRY Someone unleash the BULLARD or any other FED head. Must...keep...the...market...up!!!
I kinda think they will so they can turn around and lower them again.
Too late most likely. Should have done it a year ago and live with the ensuing pain.
At best we would have seen a pretend 25 bps rise, now we get to watch another exciting game of kick the can. The FED can't do anything without taking a chance on fucking the mega-banks and this is their best hope for doing nothing.....
Rate hike...... Lol..... It's Tuesday humor time I see.
We have TGIF, this can be used twice a week.
Sure
Happy
It's
Tuesday!
Why are the odds not negative yet? To cap gold and silver? Or because the Chinese, Indians, Russians, Brazilians will be buying lots of iPhones with depreciating currencies?
Well, that's just fucking great.
I bet Mr. Yellen will cry on national teevee when announcing no rate hike. It could be a Kardashian moment that the Fed needs to pull their credibility out of the hole. I putting 100 on Yellin tearing up.
5 soft factors that mean it is likely that they will, rather than they should.
1. Credibility - they said they would raise in 2015. If you always tell your kids, knock it off or else and there is never any "or else", they stop listening to you.
2. Signaling theory - bad news is good news. I think they want to break that cycle somewhat by saying the economy is strong eough to handle a raise. People like believing in experts, and if the "experts" say its all good, bad data will get overlooked because hey, everything is peachy.
3. Rope to pull - I think they may be more worried about things actually getting worse, and they currently have no leverage to stimulate. A raise will at least put that back on the table, even if just optically.
4. Interest rate stability - Outside of low inflation and full unemployment, interest rate stability is their unspoken mandate. The fed knows that interest rate uncertainty is very damaging for capital budgeting and investing. Removing that uncertainty - at some point - is a must, and they know it. Get 25 bps behind us, and then do nothing again.
5. What difference will it make? Does going from a "range of 0 - 25" to an explicit 25 ACTUALLY make a difference? Not really.
And let's be honest, when has the Fed EVER been counter-cyclical? They are the peak pro-cyclical force, people.
Point number #5 sums it up. Other nations see this and are also smart enough to figure out the shenanigans of what makes a difference, as opposed to what doesn't. In other words, U.S. monetary controllers aren't fooling anyone, and it is only a matter of time...
Well, I would argue they are fooling quite a few, at least domestically, although that doesn't take much. Keep in mind, various Kardashians have kept the rapt attention of that lot for several years now.
two points. any rise in rates represents billions of dollars so the rise is significant.
in the old days a rise in interst rates sent money to the equity market. are they betting on a normal event?
They would maintain 'credibility' by simply leaving the present scheme as is, but I venture they know that full well. As counter intuitive as it may seem, given the $DX over the past year+, the 'dollar' is what's at stake, nothing less. However, the slowdown in EM is giving them (yet again) badly needed 'cover' to not raise rates, and even...
I'm in a pedantic mood, so, Tylers...
the odds didn't plunge, in fact they spiked; it's the probability of a hike that plunged.
In other words, if you are betting on a September rate hike, you can now receive higher, not lower odds.
does this mean we need to prepare for nirp? seems to me the following scenarios are on the table:
1. raise to have rope to pull when next event (recession, plunge, chain reastion defaults, something we haven't even thought of before and/or e) all of the above) happens
2. don't raise for fear of triggering and/or accellerating the very event for which a raise would obstensibly be preparing
3. if !=raise when event comes anyway (& may well be unfolding as we type) say: "sorry, folks! we're at the zero bound - you're on your own!"
once you eliminate 1-3, all of which seem pretty unlikely to me, what's left but eventual nirp? & even IF they do a token raise would the ensuing tantrum not get it immediately reversed? & even in that best case scenario would the .25 mean anything in the next event anyway? or in more practical terms: is nirp ultimately a "when" question and if so how does one prepare? (yes, I'm stacking ag). more I think about this more I'm inclined to believe it is ultimately about when...
They are bankers, which means they are crooks, and that they are going to lie so they can steal more of everbody's money.
"September Rate-Hike Odds Plunge"
Is tomorrow another surge?
God help us. Any austrian that knows his or her own theory has a healthy fear of the end of ZIRP because it will cause the biggest unraveling of bullshit ever seen in the economy in history... Which, regardless of one's policy recommendations, is going to fucking suck.