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Stocks Soar Into The Green As Question Emerges: "Rate Hike Or QE4 First?"

Tyler Durden's picture




 

It appears that the Fed's cunning plan to hike rates so it can cut rates was just foiled once again.

Moments ago stocks have soared into the green for the day in an epic algo stop run as 'traders' weigh the words amid the FOMC Minutes. The crucial sentence is "The risks to the forecast for real GDP and inflation were seen as tilted to the downside, reflecting the staff’s as-sessment that neither monetary nor fiscal policy was well positioned to help the economy withstand substantial adverse shocks." This suggests the possibility of a monetary reaction (QE4) if external shocks occur even before they have had a chance to raise rates.

Here is a sample of the litany of FOMC notices that suggest that far from a rate hike, the US economy is more likely to see QE4 first!

Some participants also dis-cussed the risk that a possible divergence in interest rates in the United States and abroad might lead to further appreciation of the dollar, extending the downward pres-sure on commodity prices and the weakness in net ex-ports

* * *

The risks to the forecast for real GDP and inflation were seen as tilted to the downside, reflecting the staff’s as-sessment that neither monetary nor fiscal policy was well positioned to help the economy withstand substantial adverse shocks

* * *

a few participants observed that although GDP growth appeared to have picked up in recent months rel-ative to the first-quarter pace, the level of GDP re-mained lower than had been projected earlier in the year

* * *

a couple of participants were concerned about the outlook for consumer spending, noting that spending had been dis-appointing in recent months even though real income had already been boosted by the lower gasoline prices and the improved labor market.

* * *

a few participants were concerned that the further decline in oil prices that had occurred in recent weeks might continue to hold down energy-related investment. In addition, government spending was expected to add very little to growth in aggregate spending this year.  

* * *

The ongoing rise in labor demand still appeared not to have led to a broad-based firming of wage increases... it was noted that considerable uncertainty remained about when wages might begin to accelerate and whether that development might translate into increased price inflation.

* * *

While the recent Chinese stock market decline seemed to have had limited implications to date for the growth outlook in China, several participants noted that a material slow-down in Chinese economic activity could pose risks to the U.S. economic outlook

* * *

considerable uncertainty remained about when wages might begin to accelerate and whether that development might translate into increased price inflation

It gets better:

Participants generally continued to anticipate that, with appropriate monetary policy, inflation would move up

But... didn't the St. Louis Fed just admit the US wasted 7 years on making the rich richer and boosting wealth inequality to record levels, while doing nothing at all for the economy?

And the puncline:

Some participants expressed the view that the incoming information had not yet provided grounds for reasonable confidence that inflation would move back to 2 percent over the medium term and that the inflation outlook thus might not soon meet one of the conditions estab-lished by the Committee for initiating a firming of policy. Several of these participants cited evidence that the response of inflation to the elimination of resource slack might be attenuated and expressed concern about risks of further downward pressure on inflation from international developments. Another concern related to the risk of premature policy tightening was the limited ability of monetary policy to offset downside shocks to inflation and economic activity when the federal funds rate was near its effective lower bound.

 

Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point.

Right, just like in 2010, 2011, 2012, 2013, 2014 and so on.

Market reaction: initial kneejerk lower to take out the downside stops, followed by a furious blast higher for the remaining stops.

Of course this could simply be an algo stop run, which fades momentarily alongside the last trace of Fed credibility.

 

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Wed, 08/19/2015 - 14:24 | 6444506 JustObserving
JustObserving's picture

QE forever

No rate normalization during my lifetime Bernanke

Besides, how can the US increase interest rates with Federal debt at $210 trillion or over $1,720,000 per taxpayer?

Wed, 08/19/2015 - 14:31 | 6444555 ZerOhead
ZerOhead's picture

< QE4

< Rate hike

Wassup?

Wed, 08/19/2015 - 14:33 | 6444568 back to basics
back to basics's picture

Neither. They are in a box paralysed at this point and utterly fucked. All they have is jawboning and if today is any idication, regreatably still works for them. 

Wed, 08/19/2015 - 14:36 | 6444576 Bastiat
Bastiat's picture

Jawboning and massive intervention?

Wed, 08/19/2015 - 14:40 | 6444597 BLOTTO
BLOTTO's picture

Why worry about rates, QE, debts, etc...

.

When something wicked this way will come soon to interrupt all this financial horseshit...

Wed, 08/19/2015 - 15:46 | 6444851 ThaBigPerm
ThaBigPerm's picture

I dropped my wallet and had to pick it up, so I missed the green bit.  Anybody get a picture?

Wed, 08/19/2015 - 15:17 | 6444750 Seal
Seal's picture

it seems incredible that this is what our formerly great country has come to

Wed, 08/19/2015 - 17:05 | 6445145 Sages wife
Sages wife's picture

Stealth QE. Books shmooks.

Wed, 08/19/2015 - 14:39 | 6444591 Unknown Poster
Unknown Poster's picture

Von Havenstein isn't out of ammo.

Wed, 08/19/2015 - 14:41 | 6444600 daveO
daveO's picture

Or both? Screw borrowers while juicing the TBTJail banks some more. 

Wed, 08/19/2015 - 14:28 | 6444547 Hype Alert
Hype Alert's picture

This shit's hilarious.  They're actually cheering that we're sliding back into recession.

Wed, 08/19/2015 - 14:37 | 6444579 Bastiat
Bastiat's picture

Sliding? Back?

Wed, 08/19/2015 - 14:38 | 6444582 ZerOhead
ZerOhead's picture

You'll never find a global warming alarmist who is happy about the nearly 20 year long pause in warming either...

Wed, 08/19/2015 - 14:46 | 6444620 Mark Urbo
Mark Urbo's picture

There is a word for that..........

 

..oh yeah - denial.

Wed, 08/19/2015 - 14:52 | 6444644 ZerOhead
ZerOhead's picture

That's a very kind word...

Wed, 08/19/2015 - 15:01 | 6444679 Mark Urbo
Mark Urbo's picture

There changing the movement name next year officially to "Climate Disruption"

 

I will translate for my ZH friends - It means that now that the whole movement has been exposed as a false theory and horrific scam, there will be a "Disruption" in the global warmers monetary gravy train...

Wed, 08/19/2015 - 14:29 | 6444557 Bloppy
Bloppy's picture

WTF difference do interest rates make right now, anyway? China is imploding. What can the Fed do about that?

 

Mass mayor hangs Black Lives Matter banner from city hall

Wed, 08/19/2015 - 14:46 | 6444618 zvzzt
zvzzt's picture

fully agree, of course. market rally is HFT stop-running anyway. 99.9% certain that wont last until the close... 

Wed, 08/19/2015 - 15:39 | 6444833 ZH Snob
ZH Snob's picture

that's right, suckers.  QE is a promise.  so, dive in with greed, but be prepared for the paper bonfire to follow.

Wed, 08/19/2015 - 14:22 | 6444514 lehmen_sisters
lehmen_sisters's picture

Death to the USD....Please. 

Wed, 08/19/2015 - 14:23 | 6444517 gdiamond22
gdiamond22's picture

DOW 32,000

Wed, 08/19/2015 - 14:24 | 6444521 Serfs Up
Serfs Up's picture

"""markets"""

Wed, 08/19/2015 - 14:28 | 6444549 back to basics
back to basics's picture

The FED has turned the markets and price discovery into a farce and not a leaf stirred in Washington. 

Wed, 08/19/2015 - 14:45 | 6444617 ZerOhead
ZerOhead's picture

"Price discovery" is now defined as an incident where someone hacked into the Fed's emails...

Wed, 08/19/2015 - 15:05 | 6444695 Consuelo
Consuelo's picture

 

Gawd I'd swear that looks like Candy Loving...

Wed, 08/19/2015 - 22:25 | 6445894 Slomotrainwreck
Slomotrainwreck's picture

Gawd I'd swear that looks like Candy Loving...

 

This candy Loving?

Now where was I?

Wed, 08/19/2015 - 14:24 | 6444523 Bunga Bunga
Bunga Bunga's picture

Trying the same thing over and over again and expecting a different result. This country is run by complete idiots.

Wed, 08/19/2015 - 14:35 | 6444571 FrankieGoesToHo...
FrankieGoesToHollywood's picture

They don't expect different results.  They expect TPTB to get rich.  That has happened and will continue to happen.  The use of charts and graphs are to sell the idea to the sheeple.

Wed, 08/19/2015 - 14:24 | 6444525 devo
devo's picture

Of course there will be QE4. Duh!!!! Even if they raise rates, it will be a gesture to make it appear the emperor has clothes, and it will quickly be reversed at the next meeting.

Wed, 08/19/2015 - 14:25 | 6444527 B2u
B2u's picture

The FED = clueless.  Time to end the FED.

Wed, 08/19/2015 - 14:38 | 6444585 froze25
froze25's picture

But they sound so smart when they speak, I know I don't understand what they are saying so they must know what they are doing.  

Wed, 08/19/2015 - 14:25 | 6444528 KnuckleDragger-X
KnuckleDragger-X's picture

This'll all end well. I can hardly wait to find out how soon we'll reach official FED Nirvana.....

Wed, 08/19/2015 - 14:26 | 6444534 Mini-Me
Mini-Me's picture

Any meaningful rate hike will require a full-blown currency crisis first.  By then, it may be too late to save the dollar.

Politicians and bankers will never proactively do the right thing.  They will always kick the can until there is no road left.  

It's too bad political courage can't be conjured out of thin air like Obama-bucks.  It seems to be non-existent in Washington.

Wed, 08/19/2015 - 14:41 | 6444602 froze25
froze25's picture

Its there, it just gets ignored by the media and the congressmen and Senators that try to do something are punished by the leadership.  Jones of, North Carolina comes to mind.  Boehner needs to go.

Wed, 08/19/2015 - 14:26 | 6444535 madbraz
madbraz's picture

=If("algo stop run"<>"ilegal and criminal",NY FED and buddies, Go to jail)

Wed, 08/19/2015 - 22:27 | 6445909 Slomotrainwreck
Slomotrainwreck's picture

SEMICOLON! Forgot the semicolon. How many times I hafta tell ya?

Wed, 08/19/2015 - 14:27 | 6444538 firstdivision
firstdivision's picture

The muted reation on the VIX has me scratching my head, and a bit concerned that Sep is going to be a ball buster.

Wed, 08/19/2015 - 14:27 | 6444541 madcows
madcows's picture

So, CPI comes out and stocks tank.  Who knows why.  ambiguous is enough to signal a rate hike is coming.

Hours later, the FED minutes are "leaked" and indicate no rate hike.  So, stocks rip every short's face off.

Of course, there is no real volume, and this is all HFT's feeding on each other.

Wed, 08/19/2015 - 14:29 | 6444551 leeholsen12
leeholsen12's picture

 

must be some goldman execs that still hadnt made enough to retire in style yet.

Wed, 08/19/2015 - 14:29 | 6444556 Thisisbullishright
Thisisbullishright's picture

Dow up 130+ points in 5 minutes?!

COMPLETELY NATURAL!!

I can't take it anymore....Fucking blow up already!!

NSA - I mean blow up as in the stock markets, not actual blowing anything up....just to clarify.

 

Wed, 08/19/2015 - 14:39 | 6444573 crazybob369
crazybob369's picture

Good save. That drone already had missile lock on your ass.

Wed, 08/19/2015 - 14:43 | 6444606 froze25
froze25's picture

Becareful man the thought police are everywhere.

Wed, 08/19/2015 - 15:15 | 6444739 Consuelo
Consuelo's picture

 

 

You forgot the little tag line 'bait' we used to end with many moons ago on usenet/rec.politics and alt.conspiracy.   If any of you oldsters out there remember those days and have that closing tag line (about a paragraph's worth if I remember correctly), please feel free to chime in...

 

Off the top of my head, it went something like this:

 

- NSA/CIA/MK-ULTRA/MI-6/Plutonium/Deuterium/Cesium/Yellow-cake/Project Northwoods/JFK/Waco/Ruby Ridge/etc., ad-infinitum...

 

Wed, 08/19/2015 - 15:17 | 6444752 taketheredpill
taketheredpill's picture

No market implosion for you.  In the worst case the exchanges can impose China Syndrome and ban all selling activity.  Presto!  Market fixed.

 

Wed, 08/19/2015 - 14:39 | 6444593 Bastiat
Bastiat's picture

Gold is capped at today's mandate of +1%, or just under $1130 spot.  All is right.

Wed, 08/19/2015 - 14:40 | 6444594 Bill of Rights
Bill of Rights's picture

GOOGLE loses data as lightning strikes storage center

http://www.bbc.com/news/technology-33989384

 

Caption: Google call me I'm and expert at wiping things

http://truthinmedia.com/wp-content/uploads/2013/10/Hillary.jpg

Wed, 08/19/2015 - 14:41 | 6444599 Bastiat
Bastiat's picture

God: don't be evil.

Wed, 08/19/2015 - 14:41 | 6444601 atthelake
atthelake's picture

Stocks, down in the morning, up in the afternoon. 

Wed, 08/19/2015 - 14:43 | 6444605 orangegeek
orangegeek's picture

QE4 requires US gov bond issuance - requires Congress to approve.

 

Not sure this will happen under barry's remaining time.

 

And with unemployment at 5%, why are retail numbers pure shit??? Even useless finance media has stopped with the growth fraud/lie.

 

The fat lady (not the cunt running the Fed) is warming up - tuck and roll.

Wed, 08/19/2015 - 14:44 | 6444610 froze25
froze25's picture

Who Yellen?  Or one of the SCOTUS butch lesbians?

Wed, 08/19/2015 - 14:44 | 6444611 Bill of Rights
Bill of Rights's picture

Agreed, Barry blew his nut, they won't give him a dime more.

Wed, 08/19/2015 - 15:10 | 6444716 FreeMoney
FreeMoney's picture

The only time that the US government didn't issue bonds was....NEVER.  The 2016 budget will have another $400 to $500 billion in bonds to issue.  

If the FED has trouble finding any tbills, I'm sure the social security "trust fucking" will be happy to sell some, or maybe the Chinese or Russians will sell some to get out.  Hell, we might even expand World War III to create the debt needed for another couple trillion in QE. 

Wed, 08/19/2015 - 14:43 | 6444607 buzzsaw99
buzzsaw99's picture

...but they noted that conditions were approaching that point.

from wiki: an asymptote of a curve is a line such that the distance between the curve and the line approaches zero as they tend to infinity.

Wed, 08/19/2015 - 14:44 | 6444608 Squid Viscous
Squid Viscous's picture

top ticked it again Tyler, uncanny

Wed, 08/19/2015 - 14:49 | 6444622 Chuck Knoblauch
Chuck Knoblauch's picture

More bread and circus.

The pain of the fall will be epic for the many.

Easy for the few.

Just another transition, a new matrix.

This isn't how God runs heaven.

There is a little more consistency up there.

Wed, 08/19/2015 - 14:58 | 6444666 Spungo
Spungo's picture

Still waiting for QE99.

Wed, 08/19/2015 - 16:22 | 6445002 Mintcoin
Mintcoin's picture

Lol. Just like the release of a new videogame console. PlayStation 1, PS2, PS3, now we have the PS4...so QE4 is long overdue to keep up with the cycle. go get ready for QE4, when does the PS5 come out? Interesting new indicator lol.

Wed, 08/19/2015 - 15:01 | 6444680 Consuelo
Consuelo's picture

 

What's the worry when 'everyone else is doin' it'...?

 

'$80B/month 'temporary' until December when we can better evaluate the overall picture and begin to normalize rates'.    Hey - they did mention at one time that the $policy option 'tool' was always there at the ready, just in case...

 

 

Wed, 08/19/2015 - 15:09 | 6444712 f16hoser
f16hoser's picture

That wore-off quick. Weird...

Wed, 08/19/2015 - 15:11 | 6444722 yogibear
yogibear's picture

Zero chance of a rate hike. A 100% chance of QE4. Round-robin global devaluation of fiat.

Wed, 08/19/2015 - 15:42 | 6444840 besnook
besnook's picture

the entire rate hike threat was an employment of the old theoretical inflation/rate hike fear will increase buying today because things will be more expensive tomorrow. it looks like it didn't work. lol.

maybe people need money to spend before they can spend it. they have apparently forgotten that part of the theory.

Wed, 08/19/2015 - 16:05 | 6444918 SSRI Junkie
SSRI Junkie's picture

that's really odd even for ppt. looks like a shark fin

 

https://finance.yahoo.com/

Wed, 08/19/2015 - 16:15 | 6444968 Mintcoin
Mintcoin's picture

Why don't they just go full Zimbabwe already? This is getting old. Yawn.

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