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NEWSFLASH: The Fed Won't Raise Rates Until (At Least) June 2016!
There has been a lot of speculation about when the Federal Reserve would increase the interest rates and we remain convinced that if the Chinese stock market didn’t move into a freefall, the Federal Reserve would indeed have increased the interest rates.
Source: Forbes
In hindsight, the Americans should be extremely happy the interest rate wasn’t increased as the economy absolutely was not ready for it. Just a few weeks after the meeting of the Federal Reserve to decide on the interest rates, a worse than expected jobs report came out. One would think an additional 142,000 jobs having been created would be good news, but that couldn’t be further from the truth. 142,000 new jobs actually was a disappointing number as analysts were expecting approximately 200,000 new jobs.
It got even worse. Even the August jobs number had to be revised down from 172,000 new jobs to just 136,000 new jobs and this resulted in the unemployment rate remaining stable for two consecutive months. But let’s have a closer look at this unemployment rate. The unemployment rate is calculated as the ratio of people looking for a job versus the total labor force (which is defined as the pool of citizens older than 16 and willing to work).
Source: Forbes
So yes, the unemployment rate has been trending down, but the mainstream media seems to be conveniently ignoring the labor force has been decreasing. Whereas 66% of the population in excess of 16 years old was willing to work in 2008, this number has gone down and now only 62.5% of the population is part of the labor force. This does have an impact of approximately 5.5% on the unemployment rate because if the labor force would have remained unchanged, the unemployment rate wouldn’t be 5.1% now, but 5.4-5.5%. So, no, the economy is NOT doing much better because the unemployment rate is going down; the unemployment rate is going down because more people are just giving up on looking for a job.
Source: Bureau of Labor Statistics
So yes, the situation is worse than it seems, and the possibility of a rate increase is going down by the day. You want evidence? Well that’s pretty simple. Have a look at the next image which shows the 30 day Federal Funds futures as of at the end of Friday.
Source: CME Group
As there’s just a 0.0575 difference between the contract value for October and December, the market thinks an interest increase is unlikely and the possibility of it happening is estimated at less than 25%. The odds are already looking better for a rate increase before the end of March, as the market thinks there’s a 60% chance the Federal Reserve will increase the interest rates by 0.25% in the first quarter of this year. And if you look further, the market is only fully factoring in a 0.25% rate increase by June of next year!
Truth be told, the hands of the Federal Reserve are tied as the American economy isn’t performing as good as they would like to make you believe. Even more so, they also tied in the state of the global financial system as another factor for their monetary strategy. So, in the end, the Fed is becoming their own problem, which is why the central bank won't raise rates any time soon. Or maybe, never at all, until the market forces the Fed to act.
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Newsflash: I don't give a fuck, I left the casino years ago.
Are we (the US) a Country of Political & Economic FOOLS??? One does not need a Poitical Degree and a PHD in International Econmics and/or Degree in Financial Engineering to see that the US is rapidly approaching a Point in Time of "NO RETURN" --- We are out of 'Financial' Fuel and must preform an Emergency Landing or CRASH!!!
QE-4 would choke the US Financial Markets at multiple levels --- the US/World needs a Different Solution --- and what we are doing with QE only serves to increase more DEBT and the US Cannot Even Service the Interest Payments without Printing More Money.... Nuts! What is Wrong with this Picture??? QE 1, 2, 3 & Tapering = $5+ Trilliion (so far!!!) --- US DEBT is approaching $19 Trillion!!!
When will our Political Leaders WAKE-UP????
Self-Serving Polititions ONLY interested in Votes are Criminally Blind to the Problem!!!
Instead of "Kicking The Can Down The Road" with the Next QE-4, I would suggest that The World Governments might File a BANKRUPTCY of Sort and Zero-Out all Government DEBTS Owed by ALL Countries... This may sound like a CRAZY Solution, but I thing that if All Governments could Forgive All Debts OWED, then their Leaders could Start with a CLEAN SHEET OF PAPER/LEDGER...
There is No Way any of the Worlds Goverments --- with a Global Resession or Collapse on the Horizon --- are EVER going to be able to Pay these Debts Back... This would include all Central Banks, World Bank, IMF, etc., etc...
Relative to current Price of OIL and the depleted prices below $50 PBL and potentially going as low as $20 PBL, there is No Chance of these Governments Pumping Black Gold to Pay their DEBTS...
Most Governments OWN their Oil and Oil Fields and can service their DEBTS accordingly... The US Oil Industry is Privately Owned which leaves the US with its ONLY Option is to Print Money --- which is a Joke and cannot be sustained much longer.
If CHINA and its Political Partners in the Middle East, Asia and Russia are successful in removing the US Dollar as the World's Reserve Currency Status (which is already happening in certain sectors) then the US Dollar will become significantly De-Valued on an International Scale. This would be followed by Hyper-Inflation in the US and its Status as a World Power Financially and Militarily will become significantly worse than it is TODAY...
Quanitative Easing's Original Purpose was Good, but the way it is being used today in the US and several other countries in Europe and elsewhere are creating National Financial Instability which could result in Civil Wars on a Global Scale --- Greece was just the Canary-in-the-Economic Coal Mine --- and could possibly result in much worse Global Conflicts or even WW-III... Note; It is Only a Matter of Time before the Middle East Conflicts overflow into Isreal's and Palistine's Conflict which then will trigger the "GAME OVER" Flashing Lights that can ultimately be seen from Outer Space!!!
Radical Religious Idealogies will help to destroy Western Civilization on a Global Scale if not irradicated entirely... There is No Room for this kind of thought to prevail on this planet. So much for the Statemanship of the POPE --- is anyone listening???
Russia's (and soon CHINA's partisipation) obvious Take-Over in SYRIA and soon to follow IRAQ, Middle East, etc., etc., plus CHINA Military Build-Up into the South China Sea is just the beginning... These escalations ONLY serve to Exerbate the Political and Economic Stability of this Planet Earth... This is a beginning of a Cold War Conflict that will make the Cold War of the 60's pale by comparision. I was in the Submarine Service on a Nuclear Attack Submarine during the First Cold War in the 60's --- I have seen it First Hand and TODAY is significantly more troubling and dangerous...
Continuing to Repeat the Same Mistakes Over and Over Again and Expecting a Different Result is Mental & Political FOLLY!!! To think otherwise is Putting Your Head In The Sand --- Mr. Obama!!!!!!
I leave you with this Question:
Are we entering into a "...Global Political & Economic PERFECT STORM on an International Scale???..." You decide..... Pray to whom ever you Pray to....
Hell, by June of next year, I'll probably be living in a canyon in central Arizona eating roasted coyote. Difficult part is trying to avoid contact with the few really really bad people that slink around out there. I figure it's still better than any metro area. Just not sure how I'm gonna get all that Spam and tuna to the canyon.
THIS COMING FROM THE SAME ANALYSTS THAT STATED AND ASSURED US [WITH VERY VALID REASONS] THAT "QE" WOULD AND COULD NEVER END.
WHY WERE YOU "WRONG" ON THIS ACCOUNT? AND HOW COULD YOU BE "POTENTIALLY" WRONG NOW. BRING "THAT"ANALYSIS TO THE TABLE, INSTEAD OF TALKING IN ABSOLUTES.
NEXT!
the question is when they lower rates?
Newsflash: The Feds aren't ever going to raise rates, as this would crash all the markets and ruin the banksters.
It's a matter of figuring out when bumping the rates will do the most damage......
You don't say. Breathtakingly insightful.
Negative! They will never raise rates unless an honest conservative was elected President. Then they would crash thier shit.