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What Bill Dudley's Hedge Fund Advisors Told Him About A September Rate Hike
By now virtually every prominent financial authority or pundit has chimed in and told the Fed not to hike rates: these include the IMF, Larry Summers (who for some reason lost the fight with Yellen for the Fed chair because he was seen as "too hawkish" - oops, irony), and even China. Yet all of these are irrelevant, because when it comes to soliciting opinions, the NY Fed in general, and former Goldmanite Bill Dudley in particular, care about just one group of "advisors" - the Investor Advisory Committee on Financial Markets (a group created in July 2009 after the 2008 market crash) also known as the billionaires who run the country's biggest hedge funds, prop desks and PE firms, including JPM, Credit Suisse, Apollo, Blackrock, Blue Mountain, Brevan Howard, Tudor, Fortress, and lo and behold, David "Balls to the Wall" Tepper.
The next IACFM meeting is scheduled to take place in October, as such it will be too late to change the Fed's opinion for a potential September 17 rate hike. Which is why we have to revert to the latest advisory committee meeting which took place on June 25, just before the Greek referendum was announced and two months before the Chinese devaluation, the July FOMC minutes and subsequent market correction. It will have to do.
This is what the "smartest people in the room" told Bill Dudley and his minions about a potential September rate hike. From the June 25, 2015 minutes:
Domestic Developments
Committee attendees discussed the outlook for the U.S. economy and their expectations for monetary policy. Overall, they noted that real economic activity has gradually improved after a lackluster first quarter. Committee attendees characterized indicators of realized inflation as improving, but subdued relative to FOMC objectives. Meanwhile, the labor market was viewed as at or near full employment.
Committee attendees suggested that the FOMC is likely to increase the federal funds target range during 2015, with September cited as the most likely timing of liftoff. Some felt that financial markets are well positioned for liftoff, while others expected volatility following the first increase in the target range. Most Committee attendees suggested that the path of the policy rate would be more impactful on financial conditions than the timing of liftoff. They expected the path of monetary policy to be data dependent, but noted that they expect the FOMC to be cautious during normalization.
A quick primer on what "discounting" means - since all the participants expected a September rate hike, and since most expected volatility "following" the rate hike, some of these "smartest people in the room" decide to frontrun the volatility (a polite way for violent selling), and sell first before everyone else did. Just in case there was still some confusion about the recent market selloff.
But back to the advisory committee minutes, and what it said about global developments including China:
The sharp rise in core euro area yields during the second quarter was mostly attributed to positioning dynamics, with some feeling low yield levels were too extended. Committee attendees suggested relative value considerations prompted the coordinated move in global developed market rates. Better-than-expected economic data in the euro area and, to a lesser extent, shifting expectations for the ultimate size of the ECB asset purchase program were cited as contributing factors.
Committee attendees suggested that the euro area economy is improving, but that inflation indicators remain below mandate consistent levels and are likely to remain there for a considerable time. They felt that the ECB was doing its part, but fiscal and labor market policies across the region were likely to inhibit the euro area from reaching its inflation mandate in the near term. Most felt that that further euro depreciation was necessary to stimulate the economy.
Committee attendees generally concluded that the Japanese economy has also improved, highlighting the strength of the labor market and the improvement in inflation indicators. A few cited concerns about the Bank of Japan’s exit strategy, given the size of their balance sheet.
China was the focus of the emerging markets discussion. Committee attendees characterized the Chinese economy as slowing, with most believing GDP was running below the target level. Most concluded that recent PBOC easing measures were executed to combat the slowing economy, but noted that financial conditions were not easing much in response. Committee attendees acknowledged officials’ efforts to internationalize Chinese markets, but suggested some of those efforts may run counter to easing initiatives. Beyond China, Committee attendees did not consider emerging markets, on the whole, well prepared for liftoff by the Federal Reserve given that few countries have made structural changes necessary to absorb higher rates.
Well, they were right: emerging markets have since been paralyzed by the biggest currency collapse since the Asian Crisis of 1998 in the aftermath of the Chinese devaluation. However, if the June minutes are to be trusted, then none of what is going on in China is a surprise to any of these smartest people in the room, which is why "Committee attendees suggested that the FOMC is likely to increase the federal funds target range during 2015, with September cited as the most likely timing of liftoff", unless...
What appears to have happened in the ensuing 2 months is that none of these so-called "smartest" people hedged against anything that they warned may happen. Well, actually we take that back: recall from August 14, or just two weeks ago: "Did David Tepper Just Call The Market Top" - the S&P tumbled some 10% since then.
In fact, what has happened is that none of these "smartest people" were actually hedging anything - only Nassim Taleb was actually prepared and ready to capitalize from a market crash, and as we reported last night, his affiliated hedge fund, Mark Spitznagel's Universa made $1 billion last Monday. As for everyone else, well, just look at the table below which including many of the "advisors" listed above:
In fact, the hedge fund performance ranking above is the only thing anyone has to care about when evaluating the chance of a Fed rate hike: if and when the hedge fund losses become too unbearable, any rate hike - September, December, or whenever - will be indefinitely delayed. And that is all Bill Dudley will hear from the only group of advisors whose opinion, and offshore bank accounts, he cares about.
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The Fed must serve its masters, the 0.1%.
Everyone else is a peon to be sacrificed to maintain the fascist, police state that is America.
Is it any surprise that the 0.1% now have more wealth than the bottom 90% in USA?
The Fed Won: America's 0.1% Are Now Wealthier Than The Bottom 90%http://www.zerohedge.com/news/2014-11-11/fed-won-americas-01-are-now-wea...
Who rules America?
The secret collaboration of the military, the intelligence and national security agencies, and gigantic corporations in the systematic and illegal surveillance of the American people reveals the true wielders of power in the United States. Telecommunications giants such as AT&T, Verizon and Sprint, and Internet companies such as Google, Microsoft, Facebook and Twitter, provide the military and the FBI and CIA with access to data on hundreds of millions of people that these state agencies have no legal right to possess.
Congress and both of the major political parties serve as rubber stamps for the confluence of the military, the intelligence apparatus and Wall Street that really runs the country. The so-called “Fourth Estate”—the mass media—functions shamelessly as an arm of this ruling troika.
https://www.wsws.org/en/articles/2013/06/10/pers-j10.html
They've been jawboning about raising rates for a few years and conditions are never just right. Who really think it's going to happen next month? Suckers and idiots. That's who.
That's a pretty sad list of "advisers"
Jesus. No wonder the place is fucked.
Stockman nailed it with this article, anyone who thinks Fed policy has *anything* to do with the *real* economy is a a.) moron, b.) imbecile, c.) idiot, d.) stooge
http://davidstockmanscontracorner.com/the-central-bankers-malodorous-war...
Ray Dalio... Head of The World's Largest Hedge Fund...
(Begs) Bets that the Fed will launch QE4 instead of tightening rates / hiking rates sometime in the next quarter.
Ray Dailo (Usual Hedge Fund Newsletter Speak...)
"While we don't know if we have just passed the key turning point, we think that it should now be apparent that the risks of deflationary contractions are increasing relative to the risks of inflationary expansion because of these secular forces. These long-term debt cycle forces are clearly having big effects on China, oil producers, and emerging countries which are overly indebted in dollars and holding a huge amount of dollar assets—at the same time as the world is holding large leveraged long positions.
While, in our opinion, the Fed has over-emphasized the importance of the "cyclical" (i.e., the short-term debt/business cycle) and underweighted the importance of the "secular" (i.e., the long-term debt/supercycle), they will react to what happens. Our risk is that The FED could be so committed to their highly advertised tightening path that it will be difficult for them to change to a significantly easier path if that should be required."
Ok... so I put his text thru the Google Translator using Elite Hedge Fund Speak... and this came out... !
Ray Dalio… (Release the Kragen Text !)
"Mother of Gawd... Jebus... If Janet 'Freaking' Yellen raises rates instead of launching QE4... then... Bridgewater is fraking toast... I mean we are goners... I mean FUBAR and melt down and I will be walking the god damn streets… and day trading the Nadex.
All our over leveraged positions I put on during this formerly 'Beautiful Deleveraging' are gonna eat us fraking alive and spit out our bones... and that is being optimistic... Somebody get Yellen on the phone and get me a face to face with Her and get me some knee pads cause this is gonna take awhile."
I think Google Translate is Amazing... :o)
Source for Ray’s Actual Quotes…
http://www.zerohedge.com/news/2015-08-24/forget-rate-hikes- bridgewater-says-qe4-next-warns-world-approaching-end-debt-supercy
Dalio reads the Hedge. "I may not have time to read everything, but everything I need is in the Hedge. Or in Mary Jane Rottencrotch's panties."
"let them eat ipads" Dudley
Yeah, but at least we're not evil socialists.
Those who give orders live in "stately homes."
The Pindar is represented by the gold cap on the pyramid. The next layer, or "eye", on the pyramid represents the 13 ruling families. They are as follows:
http://www.bibliotecapleyades.net/sumer_anunnaki/reptiles/reptiles08.htm
http://www.businessinsider.com/meet-the-remaining-heirs-of-the-legendary...
Wow. It seems odd that the koch brothers aren't on this list...
Are you sure this list is up to date?
Is this an 'official' list...Actual government sponsored and vetted?
Just asking because not a day goes by when the govenments 'media' fails to reference the koch brothers and their deranged, mean spirited, racist, anti-climate "science", conspiracy theory believing.....
You know..'people' who don't trust the government??
-:)
Interview with Jacob Rothschild - True power would avoid the public domain for obvious reasons.
2015
https://www.youtube.com/watch?v=WZAB2S1mTrU
English begins at 4:00 minutes
I don't see Appaloosa on that list....which one's Tepper's?
There is No Fucking Way They raise Rates!
I'm with you, dim; but at this point what difference does it make?
As many have said, as I have said ad nauseum there will be no rate hike. If there is it will be .125. Even if its .25 what is a .25%? Seriously we're talking about a QUARTER percent like it might cause the entire worlds economy to collapse. When only the seriously mentally deluded know we're already 15 years too late.
The only left to do is wipe out all sovereign debt. Print new currency and start all over again. There are only two ways out, debt jubilee or complete and global currency debasement.
Who was it the other day, Fischer, who said that they're bound and determined to do so, probably 25bps and it will be gradual.
See, that's the kind of crap uttered by those that be in power that is just embarrassing.
By a gradual 25bps, does he mean 1bp a month for 25 months?
Got to think they will try the .25 rate increase while at the same time announcing they stand ready to unleash QE4 should the rate increase cause havoc. And since most of us know QE4 has to come whether or not the rates increase, it give them some cover and extra can kicking time before the eventual global bail-ins have to be unleashed on us all.
Arrest that scumbag pig. Financial perverts must be locked up.
Dudley has a smile that just makes you want to smash a "2X4" over his cranium.
quick glance at the list With Names like the:
Tulip Trend Fund- and
Keynes Leveraged Quantitative Strategies- or
Russian Prosperity Fund --did you expect any different? were you not at least sutbley subconciously warned? Are you not entertainted?
zhers know moar about future fed actions than dudley does and that's just sad.
Fed will do nothing.
"please dudley, don't make us take the red pill"
Some of the things the Committee was saying in June sound familiar, as if I've heard it before. Oh, from Fischer's mouth today. Maybe Dudley isn't the only Fed fuck taking orders from the Committee.
Examples: Rate path more important than timing of first rate hike and caution during normalization.
Can any of Fischer's other statements be linked almost verbatim to the Committee? Maybe I'm just paranoid.
[pins and needles wondering what the privately-owned "bank" will do]
People are so sick and tired of this financial engineering to make up for the fact our economy is in the toilet, and we don't manufacture anything anymore. Trump taking hold of DC and cleaning house can't come fast enough !!
i kind of agree with you, but Trump is a moron. If you dont understand that then you too are a moron.
I am a moron,are you French?
LOL, Vote GOP, DEM OR moron.
Hmmmm. I hate promoting insanity. I will vote moron..... and any moron will satisfy my sanity.
PROUDLY VOTING FOR MORONS EVER SINCE 1992.
...So, basically more 'IF you don't do as we say there will be tanks in the streets!' talk.
Well, I for one am tired of this game of chicken where I keep getting screwed every time .GOV swerves for these assholes. ...& it isn't as if the tanks aren't pretty much already in the streets with the militarization of teh police -complete with new revelations of imminent drone deployments I might note.
Let's quit playing this fucking game and pull the pin on these fuckers.
THINK God dammit..
THEY OWN 90% OF THE ASSETS, RIGHT??
GUESSS WHO IS GOING TO TAKE 90% OF THE LOSSES AND PAIN?
THEM.
What are they gonna do to us that already hasn't been done?
Kick us put of our homes and take the car and the furniture?
Steal whats left of our pensions and ship whats left of our jobs away?
Why wait for the next engineered crisis to lose what is left at this point?
We ALL know these are completely premeditated and engineered crisis...
Good luck trying to do that to all of us all at once when we all say FUCK YOU together in one breath!