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The Only Thing That Was Preventing A Rate Hike, Just Flashed A Rate Hike "Green Light"
Overnight, UBS' Drew Matus - who still expects a September rate hike - writes that while "domestic momentum seems strong enough to support the beginnings of policy normalization with a rate hike in September" and that "the FOMC's central tendency projections for domestic activity are generally being met", cautions that "foreign strains and their spillover into financial markets have lessened the likelihood of that hike."
No surprises there, as this was merely a confirmation of what Bill Dudley said three days ago when he said a "September rate hike is less compelling" launching the biggest two day market move in history, even though counterintuitively what Dudley said was that there will be no rate hike as long as stocks are down. Stocks reacted by soaring, thus making September "compelling" once again.
Here is UBS' rate-hike checklist.
So focusing on the red checkmark, here is what UBS' 5 day average looked like as of yesterday.
Here's the problem: as of this moment - not averaged - financial conditions, thanks in no small part to the epic Chinese stock market intervention, the rumored BOJ intervention in the USDJPY which has sent the Dow Jones soaring the most in the past two days in history, and thanks to the biggest short squeeze, are once again in the green.
Which means that the relief rally from the market drop that resulted over fears of a Fed rate hike, has pushed financial conditions back to a level which allows the Fed to hike again, which in turn means the market can drop again having risen enough to allow the Fed to do what it has done.
Got that?
This, as the algos would call it, is a closed loop, and is certain to overheat the Gallium Arsenide semiconductors at one or more New Jersey data centers for the second day in a row. Whether the biggest market dark pools will again close as a result of an air conditioner malfunction and thus hinder the proper functioning of the "market" remains to be seen.
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"domestic momentum seems strong enough to support....
I stopped there.
Just Flashed A Rate Hike "Green Light"
Double dog dare you bitch.
How the Fed ACTUALLY makes decisions: they call all their shareholder banks and ask "do you want a rate hike?"
What do you think the responses will be in September? Because that's what they'll do.
The fed calls and asks, "Do you want money for nothing and chicks for free?"
How often do you think the answer is, "No, we don't want chicks for free, and we want to pay for money."
Missing from their rate-hike checklist,
Tooth fairy weight gain: 17 lbs (y/y through Q2)
Again... What I said...
But noooooo...
The Fed will raise rates. That's what they do, after all: raise and lower interest rates. The longer rates are stuck at zero, the more likely it is that people will recognize that the Fed is becoming a useless artifact.
This is simply a matter of institutional survival. Rates MUST be raised, at least once, by at least 0.25%.
I agree Buck, they will raise, but it will be a token amount to appear to be doing something. However, if China and the rest of the world keeps dumping their paper, rates could begin to rise on their own, and the fed will be the tail on the dog. Even though there is massive manipulation in the "markets", eventually, true price discovery wins out.
This will be the issue for investors going into Sept-Oct in that it may do alot of Red/Green rate window changes like a bad game of "mother may I". This should shake the weak ones out of the tree with volent up down stock market swings causing them to throw in the towel before it finally rebounds higher from money running out of Euro bonds.
Market up ..........Rates up
Market down.......Rate stays the same
What if stay sideways?.................Limbo land?
And what has interest rates got to do with stock prices other than buy backs will get more expensive and company borrowing will be as well.
damned if they do and damned if they don't
They were damned before they started!
Can we replace the Fed meetings with a big wheel ala The Price is Right? Tick tick tick...tick....tick....+0.25% Let's give em a hand, folks!
More like what South Park sugessted:
https://www.youtube.com/watch?v=wz-PtEJEaqY
It shows that US markets are just controlled by Fed manipulation as every economist obsesses over a tiny rate hike. So much for the free and fair markets.
The idea that the rates even have a meaning in the age of monetized debt is on it's face ridiculous.
wages down - check
maggot assets up - check
Paing Headbanger...
You have to say it 3 times , you mook ps with a shot of scotch
What a load of crap. UBS? Really? By now every educated market observer knows that there will be no rate hike for a very long time. In fact, the 1 trillion and counting dump of US Gvt. Debt by the Chi-coms is indeed a defacto rate hike. I'm so bored with the chatter class and this bullshit FOMC "meeting" show. This is a clown show designed to keep the sheeple distracted by some shiny thing they spotted in the dirt as they plod along in circles unawares.
Now that's a HFT catch-22 circle jerk.
Long Ice buckets....
And corks.
Remarkable stick save in TRANS
https://www.tradingview.com/x/35ri5Sxo/
Its like the world woke up and started shipping tons of goods overnight lol
That was just the Fed shipping money. In hundreds, how much do you get in a ton?
According to the Bureau of Engraving and Printing, all U.S. bills weigh the same: one gram. About 454 grams make a pound, which means that a ton of dollar bills would be worth $908,000.
For full Keynesian silliness, we should put dollar bills on ships and trucks so that they make a full circuit of the earth before we bury them and then dig them back up.
BTFD The banksters will protect you.
The whole world is on fire with fiat and derivative insanity and everyones eyes are on whether the Fed hikes by 1/4 or not. Fucking ridiculous to the nth degree.
Don't be deceived by the low number. If you're a bankster or a firm that's part of the in crowd, who pays 1% now, an increase of .25% instantly increases your carrying charges on new loans by 25%. When you're levered to the hilt, that's the only number that matters. That's the liquidity trap the Fed has painted us into, and the only ways out are either default or hyperinflation, there is no third way.
No rate hike or .125% (my guess 5% chance) next year just to say we did it followed by QE4. Did all these geniuses calling for a hike forget we have an election coming up?
The Fed knows where interest rates ought to be in the U.S. exactly like the Gosplan knew what steel production ought to have been in the days of the U.S.S.R. That is, not at all.
So we get to watch as the dollar collapses like the Berlin Wall. Idiots.
The rate increase is coming no matter the data - they have no choice.
An attempt at a controlled unwind or 2008 type crash coming - liquidity vacuum.
You're right - they don't have a choice and the 'data' won't matter, just like the 'hike' itself...
The Fed being "data dependent" is a effing lie.
The cuts began with unemployment around 11%...now they calcutalte it at well under 6%.
There is still inflation....despite how they calculate it....
Housing is at record highs in many cities and the rental market is off the charts as well
Data dependent....lets look at the stock market....if its down they wont, if its up they will talk about it ..but wont either...
Bernake declared a rate hike when unemployment got below 7%....datat dependent??? Really?
Throw a pile of crap against the wall and see what sticks. That's their data point.
The Federal Reserve Act states the monetary policy objectives of the Federal Reserve as:
"The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates."
All that long ass sentence really means is "The Federal Open Market Committee shall maintain Government Welfare for Wall Street's elite."
"Financial conditions"? That looks a lot like a chart of the S&P to me. UBS just admitted that the Fed props up the stock market.