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Rate-Hike Looms As The Fed's Much-Watched Consumer Confidence Bounces
Thanks, we presume, to a resurgent stock market (because almost every macro and micro fundamental data item has been a disaster), UMich Consumer Sentiment rose from 89.0 to 92.1, bouncing after 3 straight months lower. Both current situation and futures expectations rose (the former to near cycle highs). Good news right? Be careful what you wish for however, as The Fed's Bill Dudley previously noted this consumer confidence data is a must-watch for The Fed in its rate-hike decision-making.
Despite the gains in overall sentiment, inflation expectations (short and long-term) dropped
So UMich bounces notably as Gallup hits multi-year lows?
Someone is lying!
Charts: Bloomberg
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I'm so glad the US economy is built on hope and rosy numbers. To the moon!
So the Fed is going to make a decision on a few phone calls about how people feel/guess and disregard their mandates?
"Rate-Hike looms"
HA HA HA
Maybe after gold shoots past $2000 but probably not until it is too late anyway.
gold reflects "inflation" tough to get that depressioin inflation going
It seems there is a misinterpretation of "consumers falling confidence in currency" as "rising consumer confidence". People know that they are getting zero interest. With the not-so-hidden inflation and talk for negative interest rates, folks are willing to get any tangible assets in exchange for a failing currency.
That does not sound like "consumer confidence" to me. But what do I know? I'm not a banker.
If the University of Michigan Consumer confidence reading is up, they must have conducted their survey in Detroit among these people:
https://www.youtube.com/watch?v=NzspsovNvII
Naw, they ain't ever gonna raise rates voluntarily. The official numbers are a fucking joke, just like they are, buoyed up on the false narrative of an improving economy. The Gallup poll is definitely closer to the reality of consumer sentiment.
Indeed. Fufuxsayk. I'm getting so weary of all this 'Will we, won't we?', the Fed has got a lot to answer for. Bunch of academic fuckwits.
DavidC
SHUT THE HELL UP WITH THE "RATE HIKES"...The FED would not only blow up the global economies, but would VAPORIZE its own Balance Sheet.
This is now beyond fucking ridiculous.
The ridiculousness is just getting started my good man...
Rate Hike Looms.....sure it does! Friday humor right here.
Ofcourse someone is lying. That's a criterium to be choosen as politician.
Who the fuck are they asking these "confidence" question(s) to?
Dead people? Jesus fuck....this is sheer madness
repo men, collection agencies, university accountants, .gov employees, health care and insurance accountants, algos, prop desk traders
Yupper, obviously this was before the billing increase for ACA arrived in the mailbox.
They have no choice, they have to tighten
And...they want the market to RISE while they do because EVERYONE knows...more expensive money (and energy) is GOOD for everyone!!
R-i-g-h-t. Which will be why NIRP and QE4 have been quietly hinted at. The Fed has absolutely, 100%, cornered itself and it doesn't know the way out.
DavidC
The only way they get the spending to support QE4 is with a massive negative income tax. One of the reasons QE3 was wound down was their wasn't much of anything left for them to buy as the deficit was coming down and no one was taking out mortgages. If the S&P/DOW and Housing Bubble 2.0 pop at the same time it's going to be 2008 all over again. the "Helicopter Drop" will be a massive increase in the Earned Income Credit to cover higher wage workers (which given the inflation aren't really high wage earners anymore) as well as a Housing Credit similar to what they had in 2010 only larger.
Donald Trump's tax plan with no one under 50K paying any taxes on income got my attention. He may be closer to winning than we think as his platform (minus the truly unrealistic stuff) just might be what TPTB want. Manchurian Candidate???
Rock and hard place, though. If they tighten, it looks like they caused the coming recession (and hopium PR bullshit aside, they must know it's coming.) And the market-obsessed parasites will all scream that is exactly what caused it.
If they don't tighten, they at least maintain plausible deniability. Then the usual neo-liberal suspects will pick on labor, business regulations, unions, "entitlements" and such as the appropriate parties to blame . . . which is music to the ears of the haters who thrive on that shit.
If I were the FED, I'd just leave it alone at this point. If they had ever really believed they would raise rates in the 7 years post-2008, they clearly missed their chance. But then, QE and other welfare for the financial set seemed to be their real goal, so I'm guessing it's been bullshit from them all along anyway.
"Rate-Hike Looms"
Yea and it will keep right on looming!
We need MOAR data....Signed, Jack Yellen.
Affirmative. [/Newt]
Why don't we put her in charge!
I'm on it!
Wow even more confident than 2006. Impressive.
I'm confident someone from Michigan win this week Spartans vs. Wolverines.
At least at this ONE place on the fucking internet, could we please agree to never again post that 'the fed is going to hike rates at <pick your date>'? They've made it clear they're never going to hike rates (which is obvious anyway given the implications) so could at least ZH stop playing along with their ridiculous game? I mean, it's fine for CNBC to spout that kind of bullshit nonsense, that's what they're paid for, but surely there are other alternatives for ZH to get clicks than by providing a forum for rate hike propaganda?
"other alternatives for ZH to get clicks"
Russian Hooker tittie pictures would be good.
i sense a numbered list of indicators that the world blew up yesterday is on the way
A rate hike wont happen. The Fed won't risk raising rates then crashing the economy. They know how bad the economy is. They just won't admit it. They will try to get away with rates staying at 0% until Obama is out of office.
The Fed is getting desperate to keep lid on a series of potential pressure cookers that could crash their beloved stock market. The Fed is doing stealth QE buying stocks on a daily basis through their proxies Goldman Sachs, JP Morgan Chase, and Morgan Stanley.
Time to Audit the Fed !!!
Do these guys actually ask people what they think?
Because I can imagine that phone call: "Am I confident about the economy? What they fuck, why not. Yeah. Sure. I am wicked confident."
More like "Fruit of the Looms" - we'll all eat our shorts if the Fed hikes from this CCI data, seems only declines factor into their over-reaction function
This is madness and everyone know the game of these liars!
I do not know 1 person who is confident in this goverment ability to solve our problems or this economy. Where the hell is this sample size taken from? Most likely there was no sample size at all, this data is total fabrication.
We are talking about U of M here. If you've ever been to Ann Arbor you'll know that 90% of the people in that town live in a literal fantasy land where everything is awesome.
I know a unch of guys working in NYC that have never been happier...what are you talking about. The Clintons have never had more money....hedgefund guys have never stolen more....private equity owns a whole bunch of houses and farmland....squeezing the middle and poor class to death. Government workers have never retired earlier or on more money....
You need a new circle of friends....what are they normal workers trying to make a living....LOL
My cousin is a Fire Capitan in CT....waiting to retire at 55 on $100k pensions(works 3-4 days a week)....who wouldn't want that
Everybody I know is 100% confident in the Government's ability to completely add to this country's problems. In the last 50 years, name something the government has done to better this country?
What, land on the moon? Give us teflon and velcro? Yah-freekin-hoo. How about a couple hundred trillion in debt? How about endless wars? How about falling wages and rising inflation? How about the mega flight of manufacturing? or the NAFTA impacts. Or the dodecadoubling of the FSA? How about the non-preparation for the baby boom retirement? How about the quintupling of college tuition every year?
Yadda yadda. Way to go, fucking assholes.
Might as well be a survey of people that have dogs or cats...shit is fucking irrelevant and subjective...great thing to look at when you're making major policy decisions. My god we live in a fucking fantasy land.
As much as I enjoy the variety of views on ZH, I think it's about to time to eliminate from submission any article that mentions the possibility of a Fed rate hike. The possibility is beyond ridiculous, and anybody blind enough to think it's a possibility is too brain-damaged to consider logically sound even on other, unrelated topics. SMH
Or any story sighting the UMICH confidence chart.
So job openings in August dropped a bit over 290k... According to Aug NFP 136k jobs were filled.... WTF did the other 160k job openings go?
Who the fuck are they speaking to? Are these pollsters waiting outside of Saks Fifth Avenue and Bergdorf's????
This sort of nonsense is all that is left for the Fed to keep from further monetizing debt, outrightly. I suspect wrong-headed U.S. foreign policy moves are going to accelerate this process mightily.
They won't raise rates the market will do it . Won't be a dam thing they can do but say they did it.
LIARS....can never raise rates...too much Obama debt!
THEY WILL NEVER EVER RAISE RATES!!!
CONFIDENCE NUMBER CAN BE AT 99.8 AND THE FED WILL MAKE UP SOME SHIT SAYING THEY NEED IT TO BE 99.9 JUST TO JUSTIFY NEVER RAISING RATES, BECAUSE THEY CAN NOT DO SO.
I double dog dare you.... you'll end up like Flick with the financial implosion equivalent of your tongues stuck to the flagpole.
Tired of this shit man. For months we read the same bullshit. Fuck rates, stocks and the war on terror. It's gonna be bad, very bad. Sooner than later I think
I believe they've been threatening rate hikes for a couple years now, at least. Call me jaded, but I don't believe them. Ever. Who's the lastest FED douche to threaten a rate hike, Dudley? Whatever. I'm sure Bulltard will be trotted out next month, followed by Fish Dicker, and Old Yeller or some lesser known regional bandit, er, banker.
Our currency is based on debt, both for base money and for commercial paper.
As such, specific debts can be paid off, but the total debt cannot, because there is by definition not enough currency in existence to pay it off.
Consequently, it gets rolled over, and/or rolled onto the public balance sheet and treasuries, whence it will then be rolled over ad infinitem.
Because the currency created from the debt bears no interest, but the debt itself does...and that interest compounds... debt, all things being equal will grow faster than an economy.
The only way to keep such a system floating is for technology to drive down the costs of all things by making it possible to create the same outputs with fewer inputs...ergo through restructuring the factors of production. (Using a shovel rather than digging with hands saves a lot of sweat...using a backhoe even more so.)
However, when technology is outpacing monetary production...there will be deflation, because things will be getting cheaper in real terms faster than the currency is devaluing.
And deflation is garlic and crosses to fractional reserve vampires....ahem...bankers. Including Central Bankers.
So the persistent policy bias is towards inflation.
With a persistent monetary bias towards inflation, it leads, inexorably roll-over after roll-over, towards debt overload. Essentially this monetary system is an interest-only credit card, where you buy what you want and only make the interest payments in perpetuity.
When the amount of cash flow from all production is no longer able to simultaneously sustain itself and make interest payments, you have an overload of debt. Just like the interest only credit card...eventually the compounding interest guarantees that you reach a point where you can't make the even the interest payment.
Then you get mass-defaults in the system. And each default lowers the amount of currency in the system available to pay the as-of-yet-not-defaulted loans...causing them to default in turn.
As a world monetary system...that already occurred in 2008.
So they lowered the rate to near-zero to facilitate making the payments. And then they rolled all the defaulted debt over to the Fed, and to the Federal Government where it was purchased through Open Market operations, and through expanded Federal Deficits. Gov't takes out a loan, Fed prints money to fil it, and then the money is used to make good on unpayable debts...by taking larger debts but with a later maturity debt.
They did a debt consolidation loan, in short.
So...what part of that addressed the underlying problem of too much debt to service????
NONE OF IT!!!!
Raise rates, and they'll get debt contagion.
Plain and simple.
No statistic means anything here once you understand the underlying disease.
The underlying disease is that the monetary system is an interest-only credit card, whose balance has grown too great to service.
After 2008 they did a debt consolidation loan through so-called QE. (Federal Government wrote GIGANTIC Treasuries, which the Fed used to print money, which was used to pay off failed loans.)
This only means that the 'failed' loans are now on the governments books. They are not gone. In fact, they are actually even bigger now as a consequence of the refinancing costs bringing future interest payments into the present.
Raised rates will resume the debt contagion of 2008. Nothing but a reduction in over-all debt will make higher rates possible. Note I said "POSSIBLE" not "PALATABLE".
There is nothing discretionary about this.
They can pretend to raise rates...but they'll have to simultaneously print money to do it or the debt contagion will collapse the currency system.
Let me provide an example:
Q: When a $100,000 30-year fixed rate mortgage financed at 5% defaults...
HOW MUCH CURRENCY DISAPPEARS FROM OUR MONETARY SYSTEM????
A: $193,255.78 disappears.
Get it?
When they loan the $100K, $100K comes into existence, which is given to the homebuyer. The loan presumes that you will create the $93K IN THE FUTURE and pay it as interest.
But to the bankers, your $100K loan is a $193K asset, which they can sell for $193K...leading to another $93K being 'accountinged' into existence.
Right there you have all $193K flashed into existence from NOTHING.
Some one will buy that Mortgage for $193K.
But when there is a default...all $193K will disappear...because it was never more than an accounting entry in the first place.
We're going to have mass-inflation due to bankers trying to avoid the INEVITABLE debt contagion built into their system...
OR...
We're going to get the mass-deflation, from realizing the INEVITABLE debt contagion built into the fractional-reserve, debt-based monetary system.
Mises was right.
There is no way to avoid one horn of the bull or the other.
You seem to be making a couple of mistakes here.
First, the $93K in interest money was never created by the bank. The bank only created $100K in principle when it made the loan.
The $193K in hoped-for return is probably discounted to take into account risk of default. I.e. if 10% chance of default, then booked as only a $174K asset. In a pool of many such loans this will average out to be about right and if not the bank can write the value of the pool up or down as it would any other asset that fluctuates in expected value.
The $100K in principle created from thin air to make the loan is tracked separately as a liability of the bank. The bank is on the hook for making good on it regardless of what happens.
So if this loan defaults, the bank will seize the debtor's asset backing the loan (i.e. house) and sell it to try to recapture that $100K. But say only $60K is recovered. This means the bank is on the hook for the remaining $40K liability and must pay it back itself, out of its own profits earned elsewhere.
Banks can create money temporarily to loan it out, and track it on their books while it is out there in performing loans, but otherwise can’t create it and spend it - or lose it, which would be the equivalent.
Also see my previous critique of your view of fractional reserve lending:
http://www.zerohedge.com/news/2015-10-14/rate-hike-odds-are-plunging-mar...
Where is Headbanger on this ?
Wait, this makes perfect sense. The economy is so in the shitter ,consumers are confident there will be no rate hike. Therefore, consumer confidence is higher than when a rate hike was looming.