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"It's Still September" Ignore Fed Rate-Hike Warnings At Your Own Peril

Tyler Durden's picture




 

Via Scotiabank's Guy Haselmann,

Hold onto your bootstraps. Markets are setting themselves up for a surprise as the Fed is still likely to hike rates in September.  Today’s ‘risk-on’ move is a function of those expecting delay.  Rising levels of market volatility are here to stay and will be magnified by this ‘surprise’. Those ignoring the warnings of a rate hike by Fed officials do so at their own peril.

Many FOMC members have said that they expect “bumpiness” when they raise rates for the first time in nine years.  They probably believe recent market volatility is partially explained by the fact that the September FOMC meeting is approaching and some investors were preparing themselves.

The Fed has adequately prepared the market for a hike.  Delaying the hike once again would cause harm to financial markets.  It would not be healthy to price out a hike completely, only to have to price it in again at a later date. Confidence would be damaged.

Moreover, I do not believe the Fed will opt to wait until the December meeting, because it would cause year-end balance sheet and liquidity issues that it would prefer to avoid.  Waiting until 2016, also has its draw-backs, due to over $200 billion in Treasury securities set to mature.  ‘One and done’ is more of a possibility to me than a delay.    

The Chinese slowdown and troubles in emerging market countries is unlikely to prevent a hike because those countries are taking their own set of actions to confront their respective challenges. As the owner of the world’s reserve currency, the Fed must show leadership and be the first major central bank to move.

Unfortunately, this morning’s euphoria in US markets was partially due to the combination of many economists pushing out their expectations of the first rate hike until 2016 (some believe 2017), and partially due to China cutting rates.  If they are correct, then financial conditions must deteriorate materially.

Therefore, today’s euphoria may be misplaced at this point in the cycle.  Over-dependence on exceedingly accommodative monetary policy is one of the reasons financial markets conditions are in the position they are in today.  This will be a point of discussion at the September FOMC meeting.

Guidance on ‘lift-off’ has moved so many times over the past several years that there are many investors who believe that the Fed will not be hiking for many years.  For many investors the motto ‘I will believe it when I see it’ is the reason why many investors ‘buy the dip’ and why weak economic data sends equity markets soaring (it has meant more Fed).  Central banks need to break the cycle of markets rising due to expectations of continuous stimulus. FOMC members are aware of this and seem prepared to end this unhealthy cycle.

Those buying over-priced equities today must believe that the Fed will not hike in 2015 and/or believe that QE4 is an option if needed. Both could be a much higher hurdle then many realize. If I am correct, too many are over-estimating the upside in equities and under-estimating the downside.  It is time to pare risk, own long bonds, raise cash, and seek quality securities.

Those calling for delaying a hike have become more vocal.  Many cite the drop in inflation break-even spreads as an indication that the Fed is failing on its inflation mandate.  Inflationary expectations have fallen back to levels comparable to when the Fed implemented past QE programs. This partially explains why some started calling for QE4 yesterday.  (As I stated yesterday, the chance are minuscule)

However, simple comparisons are not so straight-forward.   FOMC conversations focusing on inflationary expectations are very different today than they were a few years ago.  In prior notes, I argued why the Fed’s zero interest rate policy might even be counter-productive to its dual mandates.

Regardless, monetary policy cannot restrict itself to reacting to short term inflation fluctuations.  Policy must promote the more important goal of economic growth, which requires financial stability.  Without financial stability, the Fed’s chances of achieving its dual mandates are small.

Seven years of extraordinary monetary accommodation has led to a misallocation of resources.  One only has to ask where the funds are being deployed from the annual $1 trillion+ in corporate bond issuance since 2009 to see those risks.  The ramifications are immeasurable and will be unknown for many years.

Stanley Fischer is unflappable.  He will be a steady voice, unmoved by the market’s gyrations. He will cite near full-employment and the fact that 246,000 jobs per month have been created during the past year.  He fully understands the psychology of the marketplace and the damage that could be caused by letting market volatility derail their plans for a hike and retreat from the emergency rate of zero.       

Mr. Fischer and other FOMC members are meeting in Jackson Hole Wyoming this week. Comments from the conference could easily be consistent with prior Fed messages that a September lift-off seems reasonable.  If this occurs, today’s market Euphoria will wither and reverse.  As the market re-introduces the pre-meeting potential of a hike - or experiences an actual September 17th hike - the 30 year Treasury will regain its legs, while equities and credit securities resumes their sell-off.

“It’s a hard rain’s a-gonna fall” – Bob Dylan

 

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Tue, 08/25/2015 - 16:46 | 6469985 clooney_art
clooney_art's picture

Rate hike is coming one way or the other, either via China or by Yellen.

Tue, 08/25/2015 - 16:47 | 6469992 HedgeAccordingly
HedgeAccordingly's picture

bring it on... 

Only Government Spending Can Fix This...? 

Tue, 08/25/2015 - 16:50 | 6470016 Headbanger
Headbanger's picture

What I said!

THE FERAL RESERVE WILL RAISE RATES SOON NO MATTER WHAT!

Tue, 08/25/2015 - 16:55 | 6470036 Santini Air
Santini Air's picture

Maybe tehy will punk us all at teh last minute?  Declare a bank holiday, raise rates to 6%, revalue teh dollar and reveal Yamashita's gold stash in New York?  "We're still #1!"

Tue, 08/25/2015 - 17:05 | 6470091 TeamDepends
Tue, 08/25/2015 - 17:31 | 6470217 jbvtme
jbvtme's picture

these archons think the world runs on money....

Tue, 08/25/2015 - 17:54 | 6470292 Save_America1st
Save_America1st's picture

....a rate hike in September....

 

Said the scumbag bankster schill!!!

There won't be a rate hike.  They're just trying to stop the bleeding now by lying that it will happen as people continue to bail out of the markets world-wide.  Everyone knows if they hike rates even 10 to 25 basis points the Fed will cause a massive collapse.  Damned if they do and damned if they don't. 

The Fed completely destroys themselves if they raise rates at all.  They can do it.  Go ahead and try it, old Fellen...I fucking double dog dare ya.  I'd love to see you burn in hell first before you condemn the rest of us to suffer for 100+ years of criminal bankster dictatorship. 

A rate hike of a few percent would actually be a good start...if they would have done it 7 years ago.  Instead they printed Trillions and went into ZIRP.

And once you do that there's no turning it around.

All they can do now is QEternity of so many fucking Trillions it'll make Zimbabwe look conservative.  It's the only way to continue fighting the currency war and kicking the cans down the road to the cliff just a little longer.

Then crack-up boom and everybody better get outta the way and have their stacks of phyzz, guns, ammo, food, water, and other supplies piled high!!!

Tue, 08/25/2015 - 18:01 | 6470315 hailhillary
hailhillary's picture

Like we are going to make it to September.  Heh.

Tue, 08/25/2015 - 18:24 | 6470390 MalteseFalcon
MalteseFalcon's picture

The FED is irrelevant. They can only make things worse in the short term by increasing rates. This market and this economy are going down in any case.

The FED is trying to create the appearance of control.

It's all about China.

Tue, 08/25/2015 - 18:04 | 6470329 Buckaroo Banzai
Buckaroo Banzai's picture

Rate hike in September is a lead-pipe cinch. Lock it up, it's gonna happen.

The Federal Reserve MUST raise rates, otherwise, they have no reason to exist. They aren't stupid, so you know they know that. Like any good bureaucrats, they know that job number one is KEEPING your job.

This is going to happen.

Tue, 08/25/2015 - 19:14 | 6470545 KennyW
KennyW's picture

I say there isn't going to be any rate hike. The Fed's next move is QE4.

Tue, 08/25/2015 - 19:19 | 6470564 ThirteenthFloor
ThirteenthFloor's picture

Buckaroo.  When investigating a crime, one looks for a motive.  If the Fed raises rates, Washington can't pay its credit card anymore and they happen to have the guns.  If Fed raises rates, Wall Street needs to pay for money....and they will tear the market up (+ pension funds and insurance literally blow up).

What motive does the Fed have to raise rates...unless they just like to see financial fireworks.  Fed is in a headlock

 

Wed, 08/26/2015 - 13:00 | 6473625 Save_America1st
Save_America1st's picture

your odd-ball theory ain't lookin' so good now after today's announcements, ay Buckaroo?

 

They aren't going to raise rates ever in any meaningful way.  Even a fraction of a point blows them up.  They would immediately have to retreat and lower the rate to zero again.  And they can't afford to 1. risk blowing their shit up right now.  And 2. Look like even bigger fuck-tards by having to immediately retreat and go back to zero or even into negative rate territory. 

They would rather just use words and bullshit to act like they'll do it when they know damn well they can't ever do it.  They will just keep on printing until the next world war. 

Tue, 08/25/2015 - 17:56 | 6470295 r101958
r101958's picture

"Mr. Fischer and other FOMC members are meeting in Jackson Hole Wyoming this week " (scheduled for Aug. 27-29)

"Federal Reserve Chairwoman Janet Yellen plans to skip the central bank’s high-profile conference in Jackson Hole, Wyo., this year."

Interesting timing. This crash occurring right before and during the Fed meeting. TBTF's sending a message?

Tue, 08/25/2015 - 21:55 | 6471218 Calmyourself
Calmyourself's picture

"He will cite near full-employment and the fact that 246,000 jobs per month have been created during the past year."

What the hell is Stanley smoking?

Tue, 08/25/2015 - 17:06 | 6470092 Mentaliusanything
Mentaliusanything's picture

Taking a look at the Euro / USD X rates I think Yellens got a major headache getting out of the Bearded Bernanke Corner.

See what happens Larry

Tue, 08/25/2015 - 17:16 | 6470137 OldPhart
OldPhart's picture

Fed rate hike of .000001% just so they can say they did it and still maintain credibility.

Tue, 08/25/2015 - 17:20 | 6470166 Squid-puppets a...
Squid-puppets a-go-go's picture

I absolutely dont rule that out, santini

If they were smarter, though, they would come out, revalue gold x 20 overnight and tell everyone that within 18 months mark to market will return, that rates will be 10% , and that there will be absolutely no guidance in the interim how the intervening increments are timed, and tell everyone to act (divest) accordingly

that would be an actual solution - rather than an outright swindle

Tue, 08/25/2015 - 19:26 | 6470595 Shad_ow
Shad_ow's picture

Spot on!  Logic and real trickle down, which would take some from the rich and reward those who produce, creating motivation and a will to work.  It would reward responsibility and punish sloth and waste.  Can't have that, it would diminish the power they have over us.

Tue, 08/25/2015 - 17:18 | 6470152 Hype Alert
Hype Alert's picture

Somebody needs to step up to the microphone and remind everybody it's ONLY a quarter point and then we're done.

Tue, 08/25/2015 - 17:19 | 6470156 Headbanger
Headbanger's picture

For now..

Tue, 08/25/2015 - 17:37 | 6470240 Hype Alert
Hype Alert's picture

Right, but it took 6+ years to get to this point, so I don't expect any rush for the next bump.  Yellen's got her market correction, she could easily talk that up and explain 1/4 point won't kill the market.  At this point, it's looking priced in anyway.

Tue, 08/25/2015 - 18:47 | 6470451 migra
migra's picture

Nobody is rasing rates. Period.

Tue, 08/25/2015 - 19:07 | 6470519 Beowulf55
Tue, 08/25/2015 - 16:48 | 6469998 crazytechnician
crazytechnician's picture

Rates are going negative.

Tue, 08/25/2015 - 17:12 | 6470120 Bay of Pigs
Bay of Pigs's picture

Makes you wonder if some of these bankster analysts (assclowns) know anything at all.

The last FED rate hike was in June 2006.

 

Tue, 08/25/2015 - 17:21 | 6470159 crazytechnician
crazytechnician's picture

Atleast 97% of our money is loaned into existance in the form of loans and exists as debt. Global demand for credit has been negative since 2008. People can no longer service their consumption let alone more debt.  That means one thing: Deflation Bitchez , ZIRP , then NIRP , Prepare accordingly.

Tue, 08/25/2015 - 17:03 | 6470081 LongBalls
LongBalls's picture

Horse crap. Rates are going negative and the Fed will keep on printing. Must....have....inflation......

Tue, 08/25/2015 - 20:18 | 6470787 logicalman
logicalman's picture

Rate hike.... US can no longer afford to service its debts.

No rate hike...... Belief in the Fed disappears.

Would you like me to break your arm or your leg kind of decision.

Tue, 08/25/2015 - 16:47 | 6469989 HedgeAccordingly
HedgeAccordingly's picture

ES continues to sell AH .. looking like october lows get tested ahead of end of week... 

Tue, 08/25/2015 - 16:47 | 6469993 ted41776
ted41776's picture

you've been warned

http://itsalmo.st/#doomroidtime

Tue, 08/25/2015 - 16:47 | 6469995 KnuckleDragger-X
KnuckleDragger-X's picture

I'm doubtful, since the FED doesn't want to be caught holding the murder weapon......

Tue, 08/25/2015 - 16:52 | 6470026 Headbanger
Headbanger's picture

Too late..

They murdered the whole economy with QE already

So why not bury it six feet under with a rate hike?

Tue, 08/25/2015 - 18:03 | 6470325 NihilistZero
NihilistZero's picture

If a hike bursts the stock bubble and the housing bubbles simultaneously that's actually the best thing for the economy.  Think about how relatively good things were in 2010.  The crisis begat the tax credits that combined with the plummeting price of RE gave consumers a defacto raise.  Sure we were nowhere near the economic activity of the 2004-2007 Housing Bubble, but the trajectory we were on from around late 2009 through 2012 was actually fairly sustainable.  It went to shit when (right or wrong) the tax credits ended and QE went into hyper drive.  The exact opposite of 2009-12 occured in that we've had inflation of asset prices and commodites and falling real wages.

If the FED wants to revive the economy deflating HOusing Bubble 2.0 and letting some of these zombie corps die is the best course of action.  We are in DESPERATE need of some creative destruction!

Tue, 08/25/2015 - 16:59 | 6470057 Implied Violins
Implied Violins's picture

...what if they actually WANT to kill the economy? Globalization FTW...beware the BRICS and the NWO!!

Tue, 08/25/2015 - 17:04 | 6470084 bnbdnb
bnbdnb's picture

Yes. The uber rich elite love power more than money.

Tue, 08/25/2015 - 20:21 | 6470801 logicalman
logicalman's picture

Money is the tool used to wield power.

Physical violence will work but there's a lot of cleaning up to do and it is harder to hide from the sheople.

 

Tue, 08/25/2015 - 17:07 | 6470103 gatorengineer
gatorengineer's picture

This just in

 

Brazil - Dead

Russia - Putin is in hiding, and russia is well dead

India - Ha ha

China - Rip Petro Yuan

 

NWO via Brics is dead.  They will be be back making big screen TVs and Iphones for a bowl of rice a day.

Germany is in the sights next.

 

Tue, 08/25/2015 - 19:28 | 6470598 Shad_ow
Shad_ow's picture

Who will be buying those TVs and Iphones?  EBT holders, I guess.

 

Tue, 08/25/2015 - 16:51 | 6470021 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

talking about the planet x?

Tue, 08/25/2015 - 16:53 | 6470029 buzzsaw99
buzzsaw99's picture

one and done? you're joking right? you think the fed will EVER stop meddling in "the markets". if so you are a fool.

Tue, 08/25/2015 - 17:48 | 6470277 mkkby
mkkby's picture

You misread.  He said one and done WAS MORE LIKELY than waiting longer.  Not that it was expected.

Tue, 08/25/2015 - 16:53 | 6470031 Lord Ariok
Lord Ariok's picture

The Fed is backed into a corner by all the other central banks of the world.They will never raise rates.

-Lord Ariok

Tue, 08/25/2015 - 16:55 | 6470040 davidalan1
davidalan1's picture

YES, they MUST raise rates so more folk will put their savings back into banks to prepare for the coming Bail ins

Tue, 08/25/2015 - 17:08 | 6470107 gatorengineer
gatorengineer's picture

Sounds good, but the assumption is that they have money to put in the banks

Tue, 08/25/2015 - 17:16 | 6470138 davidalan1
davidalan1's picture

I think it would be safe to say...more than alot of people..BECAUSE of these absurdly low CD, Savings  bank rates have pulled cash to store, bought gold, silver. land etc..And IF the FED ever did raise rates to a respectable level, we would hear a HUGE Sucking sound in the opposite direction..

Tue, 08/25/2015 - 18:11 | 6470353 Trucker Glock
Trucker Glock's picture

Virtually everyone I know personally, friend or coworker, has basically ALL of their money parked in banks and 401ks.  The vast majority of people don't keep cash, gold, or silver and certainly haven't invested in land at $10+k per acre.  The people I know are middle-class ($100k+ household income).  They're excited about 2% on checking account (paperless sratements and 15 debit card purchases per month).  They pay people a modest fee to manage their 401ks and IRAs.  Most see no risk in having their money in a bank.  And anyone in the market for a home doesn't want a rate hike, yet.  My local observations, anyway.

Tue, 08/25/2015 - 18:48 | 6470456 crazytechnician
crazytechnician's picture

Like sheep , lined up and waiting to be fleeced.

Tue, 08/25/2015 - 16:56 | 6470046 Soul Glow
Soul Glow's picture

It doesn't matter what the Fed soes at this point, the economy is screwed.  The monetary policy issued by the Fed has ushered in the greatest risk ever seen in finance.  That includes tulip bulb mania, Nasdaq bubbles, and housing bubbles.  This is a dollar/bond bubble.  A credit/debt bubble.  A fiat currency bubble and this bubble will crash and take all of finance with it.

The biggest problem is the dollar has no intrinsic value and there for all of the debt issued has no backing.  The dollar is a figment of imagination.  It is like monopoly money.  The system understands this very well and reality is setting in.  Soon nothing will be able to find fair value because what we are trying to price it in has none. 

The second biggest problem is that the Fed and all central banks took advantage of their ability to print as much funny money as they wanted and now the dollar, with whatever made up value people thought it had, has been hyperinflated.  Soon these two problems will align and finance will crash into a pile of ruble.  Before it does save any wealth you have in dollar denominated terms and buy physical silver and gold bullion.

Tue, 08/25/2015 - 17:07 | 6470087 crazytechnician
crazytechnician's picture

Fiat money actually has a negative value because it exists as Debt + Interest.

Bitcoin exists as a positve value and will supercede all Fiat currencies. It is not loaned into existance and it does not exist as debt. It is superior to PM's in our globalised digital age because it cannot be re-hypothecated and it can be audited in realtime.

Tue, 08/25/2015 - 17:17 | 6470146 Soul Glow
Soul Glow's picture

Gold>Bitcoin>fiat currency

Go ahead and buy bitcoins but physical gold in possesion can not be rehyphicated.  Nowhere above did I say to entrust a bank to hold your gold.  And in our digital age bitcoin can be stolen.  Just ask Mt Gox.

Tue, 08/25/2015 - 17:25 | 6470184 crazytechnician
crazytechnician's picture

Bitcoin & PM's can both be stolen. They are complementary , both limited in supply and extremely useful. Prepare accordingly , 'cos Fiat and paper PM promises & IOU's in the global banking ponzi system is circling the drain.

Tue, 08/25/2015 - 17:32 | 6470221 Soul Glow
Soul Glow's picture

Fair enough.  I'm all for you guys owning bitcoin, but I won't be buying it.  I'll be stacking silver rounds as the fiat ponzi unwinds.  

Good luck.

:-)

Tue, 08/25/2015 - 17:39 | 6470246 crazytechnician
crazytechnician's picture

Many bitcoiners are stackers as well. But diversification is also important. Bitcoin cannot be confiscated easily , found by X-Ray or RADAR and it's value can be sent 12,000 miles in less than a second.

Tue, 08/25/2015 - 17:43 | 6470256 Latitude25
Latitude25's picture

Should I wait for XT cause it's better?  I'm not waiting for gold XT.

Tue, 08/25/2015 - 17:49 | 6470280 crazytechnician
crazytechnician's picture

XT is just a simple software extension of the bitcoin protocol which increases it's transaction rate. It may or may not become the new standard. To 99.9% of bitcoin users it's not relevent. It is only relevent to software technicians , miners and node operators who are currently gunning out what the new extended standard should or should not be , once consensus is reached by all concerned parties the bitcoin protocol will come out much stronger. There is no 'fork' or other some such , bitcoin is a democratic system where majority of votes win with new upgrades and protocol rollouts.

Tue, 08/25/2015 - 18:09 | 6470344 Latitude25
Latitude25's picture

OK.  I'm confident now.

Tue, 08/25/2015 - 17:59 | 6470307 mkkby
mkkby's picture

The fed raising rates causes DEflation, not hyperinflation.  You idiots have a one bit track mind.

If there is a market/housing crash you will want to exchange your fiat for productive assets on the cheap.  Now is exactly the wrong time for PMs or bitcoins.

When major countries like spain, italy, france and japan "go Greece", then you should think about PMs.  They will have to print like crazy to pay their debts.

Tue, 08/25/2015 - 18:13 | 6470347 Soul Glow
Soul Glow's picture

lol you sound like every stock broker in the world.  How is that going for you?  Sounding like a stockbroker.

The wrong time to own PM?  When the Fed was raising rates throughout the 70's while chasing inflation gold had it's largest real return ever, moving from $45/oz to $800.

If the Fed came out with a rate hike of 15% a la Volker then maybe we wouldn't want to own PM, but housing during a rate hike?  People won't be buying houses during a massive rate hike, it will kill the only reason people are buying houses right now ie low interest rates.

And what praytell are productive assets anymore?  You want me to take a loan out from a bank and start a company during your deflationary scenario?

And the hyperinflation of fiat currecny ie the dollar already happened.  It occured while the Fed expanded its balance sheet by a multiple of 5.  All central banks did this.  Then they loaned the money out to banks which used fractional reserve lending to purchase assets like stocks which are now failing.  Haven't you noticed the dollar is losing during this stock market crash?  If there was deflation money would be moving from stocks to dollars but it isn't, it is merely evaporating into nothing, because it was nothing in the first place.

You, idiot, have a fucked up take on finance.

Tue, 08/25/2015 - 18:10 | 6470350 crazytechnician
crazytechnician's picture

There will be deflation whether rates are increased or decreased. Global demand for credit has been negative since 2008 , that means the money supply has been shrinking , hence deflation. Rates are set depending on how much market demand for debt there is. Currently people cannot afford to service their own consumption let alone more debt. That only means one thing: The government use the nuclear option and force central banks to hyperinflate by directly monetising government and private debt or we see deflation. Either way , PM's and bitcoin will be very sensible ways to protect wealth and help to build a new economy after this shitstorm has been reset.

Tue, 08/25/2015 - 18:15 | 6470364 Okienomics
Okienomics's picture

Have you considered BitGold?  www.bitgold.com

Tue, 08/25/2015 - 18:21 | 6470377 crazytechnician
crazytechnician's picture

Still wide open to manipulation. Bitcoin is far superior because it does not require physical backing. A lack of physical backing is actually an advantage in many ways , it increases the efficieny of the currency because it does not require storage , transportaion , auditing , all of these things are expensive and degrade the quality of the monetary system. What exactly is gold backed by ? A shovel ? Gold , like bitcoin is backed by the energy and effort required to dig it out of the ground , or out of the ether. The higher it's price goes the more energy is put into obtainig it. All value is subjective , there is no such thing as 'intrinsic value'.

Tue, 08/25/2015 - 19:51 | 6470683 squid
squid's picture

If you can't stand over it with a rifle..

 

You don't own it.

 

:)

Squid

Tue, 08/25/2015 - 16:58 | 6470053 Dr. Engali
Dr. Engali's picture

I'll be interested in seeing which large hedge fund ends up being reported dead over the next few weeks. Somebody's positions are getting killed while they're being forced to liquidate.

Tue, 08/25/2015 - 17:19 | 6470155 Soul Glow
Soul Glow's picture

Probably the same one long shale bonds a year ago.  That and all those long SunEdison.  And the one long the indexes.  SHit the real question is which hedge fund isn't broke?

Tue, 08/25/2015 - 16:59 | 6470056 wmbz
wmbz's picture

So "IF" the un-fed raised the rate that tiny stinkin ass 0.25 point who does it damage the most?

Tue, 08/25/2015 - 17:08 | 6470106 orez65
orez65's picture

"... .m stinkin ass 0.25 point who does it damage the most?"

Bond prices, it's all downhill from there.

Tue, 08/25/2015 - 17:21 | 6470171 Soul Glow
Soul Glow's picture

Derivatives based on interest rates.

Tue, 08/25/2015 - 17:09 | 6470061 Pullmyfinger
Pullmyfinger's picture

What a joke. Rate hike? Never, ever, EVER going to happen this side of a federal reserve note.

Tyler's head must be in a vice.

*Caveat: at this juncture, the only believable rationale and motive for raising interest rates would be to reinforce the introductory value of an entirely new "dollar". You can bank on it.

Tue, 08/25/2015 - 17:02 | 6470073 bnbdnb
bnbdnb's picture

When Yellen says "We are raising rates". Bond markets say "rates going lower".

Tue, 08/25/2015 - 17:05 | 6470088 coast
coast's picture

the fed is not backed into anything....this was all planned...

Tue, 08/25/2015 - 17:06 | 6470093 The man with po...
The man with pointy horns's picture

Negative interest rates bitchez! Embrace the NIRP!

Tue, 08/25/2015 - 17:06 | 6470097 ah-ooog-ah
ah-ooog-ah's picture

"It would not be healthy to price out a hike completely, only to have to price it in again at a later date."  

 

Priced in by 'eck as like

 

Tue, 08/25/2015 - 17:14 | 6470099 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

All this fuss over a .25% rate hike! You'd think the enonomy was in really bad shape and couldn't tolerate a hike. Unemployment is at 5.3%. Things are booming. Go ahead, raise the rate. What could go wrong? Do it!

Tue, 08/25/2015 - 20:25 | 6470817 MagicMoney
MagicMoney's picture

Haha no kidding, but nevertheless Janet Yellen expressed her inability to know what is suitable interest rate. That is the interest rate that is ideal that would not create a recesion. She pointed out that Alan Greenspan's slowly raising interest rates in hindsight was not good policy, yet when she proposes how to raise interest rates, she said she will raise rates slowly. Lololololol. She doesn't know what interest rate is ideal that is neither accomodative, or market crashing. So yes, given she prefers slowly raising rates .25% increase seems likely. Fed is cornered. It's under pressure to raise rates, because they been talking about a recoverying economy for so long.

 

The ramifications of not raising at all will truly be shocking to the markets. Forget the puny Chinese devaluation.

Tue, 08/25/2015 - 17:09 | 6470110 Latitude25
Latitude25's picture

At this point a rate hike is irrelevant, just like the FED.

Tue, 08/25/2015 - 17:10 | 6470114 Joe Tierney
Joe Tierney's picture

YELLENstein has to meet head-on the recent 'propaganda' that says central bankers have lost control....

 

What better way to send the signal that the FED is still relevant than by hiking rates in September and watching the chaos come raining down on all the FED skeptics?

Tue, 08/25/2015 - 18:06 | 6470333 mkkby
mkkby's picture

Very little will happen.  The diference between 0% and 1% is very little, except to a few highly leveraged carry/derivative specs.  They have had years to prepare for the change.

Tue, 08/25/2015 - 17:12 | 6470126 BeerMe
BeerMe's picture

I believe the first rate hike will happen in September.  They've pushed the narrative too far about things being awesome.  They will expose themselves as the farce they are if they don't do a small move.  I doubt a second one will happen this year.

Tue, 08/25/2015 - 17:15 | 6470134 bpzh
bpzh's picture

All this fuss over a measly quarter point. That's supposed to give them ammunition in case they have to lower rates into the coming depression? Won't make any difference.

Tue, 08/25/2015 - 17:21 | 6470161 Son of Captain Nemo
Son of Captain Nemo's picture

When I read this all I could think of was this game we use to play when we were kids...

Perhaps we can get Janet to mouth the words to this rap version when she makes the announcement of just what will happen after that meaningless and trivial 1/4 point hike goes into effect?!!!

Just to give you a hint of what that rate hike will look like in that ocean of derivative trillion(s) carnage... It will be akin to putting a band aid over a shot gun vicitim that's had 30 rounds of 2 3/4 00 covered from head to toe!!!

Either "on" or "off" Good Luck Ms. Yellen cause it won't make a god damn bit of difference either way!!!

Sun, 08/30/2015 - 15:01 | 6470207 RMolineaux
RMolineaux's picture

Agree Haselmann's take on the probability that the Fed will stick with its September hike plans, notwithstanding what may be happening in the stock market.  But when he says that the 30 year treasury "will regain its legs," I don't know whether he is referring to its price or yield.  It would be interesting to get some data from banks and institutions on what their plans are for an increase in 30 year yields.  Is the bulk of their holdings in trading, in which case they face huge losses on principal, or are they holding to maturity?  I suspect the former is the case, as they are unlikely to have resisted the temptation to take their gains on market prices during various QE's.

Tue, 08/25/2015 - 17:34 | 6470228 blindman
blindman's picture

The Spider and The Fly - The Rolling Stones
https://www.youtube.com/watch?v=lGXMYGdk4Bw

Tue, 08/25/2015 - 17:39 | 6470245 JenkinsLane
JenkinsLane's picture

Bollocks

Tue, 08/25/2015 - 17:42 | 6470255 blindman
blindman's picture

The Sex Pistols - NeverMind The Bollocks (1977)
https://www.youtube.com/watch?v=bucVwI0RfEg

Tue, 08/25/2015 - 17:44 | 6470261 Bossman1967
Bossman1967's picture

Cant be good for precious metals unless your buying and of course you have to find them at the price. Good luck my fellow real ZH ers its on the verge of a shitstorm. I am seeing what I missed in 2007-08 before I was awoken in bankrupcy court and am as prepared for those that did not prepare for the pain. Its too late to prepare for the procrastinator.

Tue, 08/25/2015 - 17:44 | 6470265 DOGGONE
DOGGONE's picture

Gravity is reckoned to be turned on.

Tue, 08/25/2015 - 17:46 | 6470269 Bastiat
Bastiat's picture

Desperate propaganda to prop the dollar.  Either that or it is a deliberate system crash execution.

Tue, 08/25/2015 - 17:46 | 6470270 The Luftwaffe
The Luftwaffe's picture

"Stanley Fischer is unflappable.  He will be a steady voice, unmoved by the market’s gyrations. He will cite near full-employment and the fact that 246,000 jobs per month have been created during the past year."

 

Does this mean that the FED believes their own BS?

If so, we are in much bigger trouble than even I thought.

Tue, 08/25/2015 - 17:59 | 6470308 the grateful un...
the grateful unemployed's picture

QE4 AND a rate hike. Wonder Woman Yellen

Tue, 08/25/2015 - 18:34 | 6470411 blindman
blindman's picture

qe4, i guess; rate hike will be
end times fun. we need a "religious",
denominational "leader" to supply political
cushion to protect the "owners" for that event.
perhaps they will engineer the proper s/elections?
.
so, i guess, qe4 before rate hike(ushering in
end times). oh, joy.

Tue, 08/25/2015 - 19:29 | 6470425 honestann
honestann's picture

Hey, if they've decided to crash the world again for Shemita, they'll raise rates in September.  OTOH, the collapse may be so outta control by then it won't matter.

Get the frack outta dodge!  Perhaps even more important, get every freaking penny out of every bank and financial institution (including retirement accounts, no matter what penalty you must pay).  Then buy gold, seeds, food, ammo, hide it all securely, then get ready... even if you refuse to get outta dodge like a sane individual.

As a final reminder, if you decide to get the hell outta dodge, and want a great safe place to hide/move without leaving the evil empire, I can connect you to some friends of mine in the process of setting themselves up.  You could collaborate, and their chosen place and plans are the best I can imagine short of leaving the evil empire (which is what you really should do).

PS:  It is surreal to me that 99.99% of even those who understand what's probably about to come down decide to stay in the path of the disaster and get squashed ("take their chances").  Obviously I have about a million times less normalcy bias than most folks.

Tue, 08/25/2015 - 20:20 | 6470797 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Less normalcy bias, and an airplane, plus money, but what are you going to do when you run out of supplies, honestann? Sooner or later you too will have to interact with the ZOMBIE EMPIRE.

Tue, 08/25/2015 - 21:49 | 6471179 honestann
honestann's picture

Actually not.  I'm 100% self-sufficient now.

-----

My solar power system produces about 3x more power than I need, so even when my solar-panels and batteries become less efficient, I'll be okay for 2 or 3 decades if I can't replace them.  My water supply will last forever (for practical purposes).  I grow and raise all my own food in a 100% sustainable way (seeds from grown food and chicken eggs from my chickens are the source of the next generation of my food production).

There is one potential "glitch" however.  I have several years of fuel stored for my airplane, but supposedly (some but not all sources claim) the quality of the fuel will degrade beyond several years... perhaps enough to damage my engine in ways that I can't repair without parts or materials I don't have in storage (I do have a small but fairly capable machine shop and supplies of common metals to machine).  Plus I have 3 or 4 replacements for things like hoses and other components of my airplane that obviously would be super annoying to simulate with kludged-up metal parts.

So, that appears to be my long-term weakpoint.  On the other hand, I never need to leave here.  As long as I stay, I remain 100% self-sufficient with zero external input.  This was quite the effort to get fully set up, but all that is in place now, and works.

So... I'll be okay, even if every human on the planet vanishes.  But it sure would be nice if some gasoline engineer out there somewhere could tell me what I'd need to do to "reprocess" or "repurify" my fuel after it degrades.  Unfortunately, I've had no luck finding anyone who knows the answers.  Not yet, anyway.

Fri, 08/28/2015 - 18:35 | 6483279 RMolineaux
RMolineaux's picture

You have done an excellent job of making yourself self-sufficient.  My compliments.  But have you thought about what you might have to do to confront marauding bands of looters?   IMO, community mutual defense is also required.

Tue, 08/25/2015 - 20:42 | 6470894 logicalman
logicalman's picture

I'm on my 61st trip around the sun.

Been mostly a good ride.

If the world gets much worse it won't be worth the 62nd.

There's no way to 'leave the evil empire' - it's the nature of humanity.

There are a lot of dead branches on the tree of life. It just seems a shame to get there so soon - the dinosaurs lasted about 165 million years. Looks like humans may pull off the extinction thing in about ONE.

One day there may be intelligent life on earth, but I think it's a long way off.

Tue, 08/25/2015 - 21:32 | 6471126 honestann
honestann's picture

Hmmm.  Well, I suppose it depends on how good you feel, and how long you'll last.

Actually, I totally agree that folks who get to where they believe "the end isn't far away" simply accept reality, and let nature have its way.  I totally respect that view.  For one thing, that view and attitude let's people be rational and say "no, I'm not going to let these greedy doctors and hospitals suck a million bucks out of the economy to keep me alive an extra month, week, day or hour... even if my health insurance is willing to pay".

That's just totally rational in many ways.  For example, that last month, week, day or hour will surely be some of the most miserable, and possibly even extremely painful experience ever.  How humans can make such insane tradeoffs is beyond me.  Well, actually, I suppose often the doctors and hospitals (and maybe family) force them into this, unless the patient has a strong will, and the sense of acceptance of reality that you exhibit.

So I wish you well, and I hope your life ends up being much longer and healthier than you expect.  And that somehow the disaster and chaos doesn't reach you, or doesn't cause you too much grief.

Incidentally, there will be intelligent life on earth soon.  It just won't be organic.

Sun, 08/30/2015 - 14:45 | 6487728 RMolineaux
RMolineaux's picture

Thanks.  You have given me new things to think about.

Tue, 08/25/2015 - 18:38 | 6470426 q99x2
q99x2's picture

You have to listen to Craig Hulet. He already said Jade Helm is for after the rate hike and the following bank bail-ins. They are moving in September. Dude this is WWIII and the banksters are fighting Russia and China.

Tue, 08/25/2015 - 19:39 | 6470615 gcjohns1971
gcjohns1971's picture

Does the FOMC work for its mandates? ...Nope,  works for Fed bank  owners.

Do the Fed owner-banks suffer more in inflation than deflation? ...Nope, opposite. Inflating away debts leaves banks with assets.  Deflationary default leaves them on the auction block.

Is loan-based credit growth producing enough inflation to prevent the inevitable train of defaults following a very modest interest hike from resulting in contagion? Is there enough new money CIRCULATING that it is POSSIBLE for all but fringe loans to be serviced and paid as necessary to prevent CONTAGION???

Nope. That is the MEANING of the China bust and commodity bust.

Do the Fed Owner banks have a "Good Bank" into which they can park their performing assets, such that they can allow CONTAGION to collapse credit everywhere else?

Nope.  It collapsed 25 years ago in Japan, and their next best effort is collapsing now in China.

 Does this author understand that human action is motivated by desires but guided by incentives, and all theoretical constructs are but thin veneers to disguise the real incentives?

Nope.  He clearly does not.

Are they going to raise rates in any meaningful way?

Nope...it would be suicide.

 

 

 

 

Tue, 08/25/2015 - 20:59 | 6470970 kchrisc
kchrisc's picture

If one believes that the FedRes is an independent cabal of private plunder, then yes, one can safely believe that they will not raise rates--May even not be able to.

If one believes that the FedRes is part of a larger cabal, scheme, of plunder for the benefit of foreign banksters, and a hidden colonizing and plundering power, Zion, then it is quite possible to believe that they will indeed raise rates this Fall or Winter. Especially believable if one believes that Zion's fifth-column controllers are departing the now thoroughly plundered American country for Europe.

Zion is a scheme, not an ethnicity.

 

The plan is to raise rates and the dollar to cover, financially, their "exit," from America, have the banksters prop up the rigged markets to cover their "exit," and utilize the violence of their colonial governors to quell any reaction by the American people--Rates and dollar up, markets "supported," Jade Helm and ReadyReserve.

Tue, 08/25/2015 - 21:03 | 6470990 Sanity Bear
Sanity Bear's picture

If the market carnage continues for another two weeks, then they may as well raise rates because the stock price damage will already have been in the books.

Tue, 08/25/2015 - 21:18 | 6471057 J J Pettigrew
J J Pettigrew's picture

1/4 pt raise...get it over with....

The consternation is ridiculous

Tue, 08/25/2015 - 23:51 | 6471523 JOHNLGALT
JOHNLGALT's picture

The rates will go up in Sept, Dec, March 2016, June, Sept, Dec, NO WAIT REALLY AND TRULY, cross my heart and hope to die, It will be 2017 March, June.

Looks like the markets are pricing in the Fed’s rate hike. Tell them again Janet how you are getting near to lift-off.  You have enough DATA from around the world. The rate rise will strengthen the dollar and we can get this thing finished with.  HA, HA,HA _JOHNLGALT.  p.s.  There seem to be a lot of John Galt’s out there working toward the same end.

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