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The Rate Hike Ship Has Sailed: Goldman Sees "Higher Probability Of Liftoff Not In 2016 But In 2017"
Two weeks ago, and just before Janet Yellen hinted that "nominal interest rates cannot go much below zero" (so just a little, and exactly is a "little" in Fed speak?) Goldman explained that when it comes to a rate hike, the Fed should not only not hike in December (and certainly not October), but wait until mid-2016 before the first rate hike:
Q: What is your own view of the appropriate liftoff date?
A: Our own answer to that question has long been 2016. In fact, our own view is similar to that of Chicago Fed President Charles Evans, who recently shifted his call from early 2016 to mid-2016. Although it is definitely possible to rationalize a December 2015 liftoff using various forms of the Taylor rule, there are two good reasons to delay the move longer. First, the risk of hiking too early is bigger than the risk of hiking too late when inflation is so far below target and we have spent so much time stuck at the zero bound. Second, we have seen a sizeable tightening of financial conditions. At this point, our “GSFCI Taylor rule” suggests that the FOMC should be trying to ease rather than tighten financial conditions. Our own view in terms of optimal policy is quite strongly in favor of waiting well into 2016.
Then overnight, Goldman's Jan Hatzius whose calls on an economic rebound and "above-trend" growth have been premature again and again, but whose calls on what the Fed should do are usually followed to the T by former Goldmanite and the person in charge of the NY Fed Bill Dudley, came out with another stunner.
After looking at the latest terrible US economic data which once again crushed hopes of a "decoupling", first confirmed by the terrible payrolls report and subsequently validated by the Atlanta Fed cutting its Q4 GDP from 1.8% to 0.9%, Goldman had this to say:
Further bad news on output and employment could potentially result in quite a large shift in the monetary policy outlook. When the starting point for growth is far above trend, a given slowdown merely delays the point at which the labor market hits full employment, inflation pressure rises more significantly, and standard monetary policy rules call for liftoff. But when the starting point for growth is only modestly above trend, as it probably is right now, the same slowdown might halt the move toward full employment and greater inflation pressure entirely. In that case, standard monetary policy rules might justify a continuation of the current zero-rate policy for much longer, well into 2016 or potentially even beyond. In this context, it is interesting that the reduced market-implied probability of liftoff in 2015 after Friday’s weak employment report mostly translated into a higher probability of liftoff not in 2016 but in 2017!
So for anyone still confused why the USDJPY carry trade is on fire today and is propping up the broader market, even as such "growth" stalwarts and AAPL, NFLX and VRX are in the red with the third quarter earnings season about to begin and confirm not only a revenue but an earnings recession, there is your answer.
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The "can" they keep kicking has grown into an 80 gallon drum.
Rates are going NEGATIVE .
Going?
whose wallet is that?
"We the people"
Hate to say "I told ya.., Oh,.. well,... what the hell;... I LOVE TO SAY: "I TOLD YA SO!"
There is NO WAY the Fed can or will raise rates.
We are ALL Japan now.
[I suspect it may be a long time before any of us "Mooks" hear from headbanger again...]
To he fair, guys like headbanger and myself rightly anticipated the chaos that a hold in September would unleash and figured the FED would want to avoid that scenario. We were clearly proven wrong. Whether through planning or ignorance the FED decided to accelerate the game with its Banker Has No Clothes moment. If their efforts are Machiavellian, it seems they want the market to crash without it seeming as they made the market crash.
From as far off as is Russian, is obvious to see:
1. No interest rate hike in inter-bank lending from Central Bank Cabal... ever, until utmost collapse of fiat monetary regime
2. Increase inflation in soft asset of derivative type as money from bank-o-sphere is remain in bank-o-sphere for idillic wager of bankster type... until panic is reach consensus and then is rush from soft asset to hard asset.
3. Increase in price of high grade refine copper ore (okay, okay, Boris is can wish, no?)
4. Outright war is break out between creditor and debtor nation.
5. Britney Spear is return to hair style saloon and shave head.
... but what is Boris know!?
Friend Boris! To hear you is good always! The is question... Fiat collapse for so close for to make rate raise not is far as we think? Zero is think war before rate raise. Until then in words of great Axel Foley "Welcome you is to Jungle. You die."
What happened to headbanger? Why is he gone from Z/H? I hope he is coming back, wtf? Please explain because I don't have a clue as to what happened?
I believe that wallet belongs to the vampire squid.
When you look at real rates of return rates are already negative.
Bankers- "Wahoo they are paying us money to invest"!
I hope soon, because this will be the beginning of the end.
People "forced to spend" and hyperinflation here we come, bitchez!
They (CB's) should be careful what they wish for...
Im thinking moar like 2037, if we're still around by then.
Yes 2017 and then 25 tillion in debt..yeah right..raise rates then...
OK, so Goldman has now distanced itself from any rate hike and the blame will be placed squarely on the head of Janet Yellen.
Goldman, meanwhile prepares the stock market for a rate hike by moving cronies out of stocks that will be most severely hit.
I think the manly love thing above is excellent, but Warren should be careful. It looks as if Lloyd has a cold sore on the end of his tongue... and maybe a little bit of candida blooming.
These sociopaths are just covering all their contingencies. If the sheeple revolt so TPTB don't get their next patsy as Prez, and instead get someone that might upset the apple cart, then you can bet all you own that "undesirable" along with the sheeple will be punished either by raising rates to tank the economy, or worse. The spice must flow. If not, TPTB will have the perfect scapegoat to implode this and blame the outsiders so that the sheeple will NEVER think about doing that again. This is just a "heads I win, tails you lose" setup.
Looks like the French have just about had enough:
Air France Executives Attacked as Carrier Cuts 2,900 Jobshttp://www.bloomberg.com/news/articles/2015-10-05/air-france-plans-almos...
"They're gonna get us Henry... They're gonna get us!"
The next rate hike will come only when the Dollar finally starts sliding off the table and the Fed is left with two choices:
1. Let it crash and burn in an FX bloodbath/massive inflationary spiral.
2. Defend the dollar by hiking rates (and by a shit-ton more than 25 bps) but throw the country into a massive economic downturn.
Decisons, decisions.
More QE and negative rates stands a better chance of happening before a rate hike.
They couldn't even pull the trigger on a insignificant 25bp rise.
Japan, and 20 to 30 years of the same, is the template.
One-by-one the companies that can no longer borrow and boost their stox (and shareholders, and corporates) will fall off the map like American Apparel, apparently.
FX USD and company stox will be dismal, until there are some tipping points.
Going bankrupt slowly, then all of a sudden.
Yep, it will eventually reach the point of there is nothing left to loot, so the sociopaths start feeding on each other. Watch out then, because the only real option at that point is war.
Laugh of the day. Derivatives. There, even I know it.
When is "liftoff" for a critical mass of more Banksters getting cancer'ed?
There will be no 'lift off' if the Fed keeps sending the signal that money has no real value. No rate hike means we will keep drifting into the storm. But, that's probably been the plan for quite a while now.
No rate hike or qe instead there will be war
Imaghine if this was a Nasa spacerocket on launch control -
Lift off in T-minus 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, t-minus 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months, 6 months...
Imagine what lift-off would look like if those NASA rockets were designed with pseudoscience.
Like I have been saying all along. There will be no rate hike until Obama is out of office. Therefore, my prediction is a rate hike January 23 2017. That gives Obama 3 days buffer, so the media that calls itself unbiased, can say it's all the new President's fault.
Off topic, but what happened to GLEN at 15:18??
Eric Scott Hunsader, can you please explain? Maybe some chart porn?
I'll side with Peter Schiff on the rate hike debate.
LOL. They can never raise rates ever. Biggest liquidity trap in HISTORY.
$18T debt? $25T debt? $4T balance sheet? $10T balance sheet? Rate hike in --- who knows, and who cares? All that matters now is the geo-strategic moves that the Russia/China axis make, because the fate of this house-of-$cards lies with them, and that is the biggest elephant in the room that few see.
Mercans still lapping up Goldman Suck$ Federal Reserve vomit...and loving it!
A massive war is coming ... (soon)
A war between the Gondo-Lord Butt-Kings of Planet 23 and the One-Eyed Cat-Barons of the Orn-Galaxy ...
And many trillions will die.
(real soon)
I am already dead man walking...lets make it official...
Debt clock is already at $18.4 trillion. Climbing to $19 trillion.
After the debt ceiling is increased again big it jumps again.
Again..here we go..that is why we pay the big boys and girls at Goldman the big bucks...they can look at one months jobs data and extrapolate Fed interest policy out for the next year...guess they have a damn good crystal ball..of course this is not going to change with the next report ...but then again who is going to remember this prediction a month from now..
Again..here we go..that is why we pay the big boys and girls at Goldman the big bucks...they can look at one months jobs data and extrapolate Fed interest policy out for the next year...guess they have a damn good crystal ball..of course this is not going to change with the next report ...but then again who is going to remember this prediction a month from now..
Qinfinity!
When was the last time the Fed raised interest rates in a Presidential election year?
The 12th of Nevurary
You can be certain that it won't happen while Barry is still in office.