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Bullard Reveals The Fed's Biggest Headache: Convincing The Market Slowing Jobs Is Good For The Economy

Tyler Durden's picture




 

Well, it’s NFP day (again), and that means we’ll get what Deutsche Bank described earlier as a “randomly generated number” out of the BLS and the market will either soar, tank, or shrug it off, because let’s face it, investors now have absolutely no clue how to interpret macro data. 

On the one hand, strong data should be positive for risk as it indicates the US is on the path to recovery (i.e. good news is good news). But then again, a hike means the FOMC is taking away the punch bowl and if the Fed moves and the dollar soars, that’s bad news for US corporate bottom lines just as the cost of capital rises imperiling the buyback bonanza that allows corporate management teams to take a pitiable top line and turn it into a sizeable EPS beat. 

Of course poor data means the “recovery” isn’t really a recovery at all (something we’ve been suggesting for years) and that means no hike, portending MOAR cowbell (risk positive) but it also means the US economy is going down the tubes which could be negative for risk (i.e. bad news is bad news). 

Who knows? We don’t, and neither does the Fed frankly, but don’t worry, the Bullard was unleashed ahead of today’s NFP print to explain why Yellen can still hike even if the jobs number is miserable which should be bullish... or bearish... or something. Here’s Reuters:

The Federal Reserve has been struggling to convince investors it is about to raise interest rates and now faces the risk that a likely slowdown in job growth will be interpreted as a downturn in the broader economy that will cause the Fed to hold off yet again, St. Louis Fed President James Bullard said on Thursday.

 

In an interview with Reuters, Bullard said U.S. central bankers may need to mount a new communications campaign to convince markets and the public of a counter-intuitive idea: that slowing monthly job growth is natural at this point in the recovery, and will allow the Fed to stay on track for a likely December rate hike.

 

"This is not Lake Wobegon. You cannot be above average all the time," Bullard said. “I don't think markets have absorbed this. Everyone has in their head 200,000...The natural expectation is for the pace of job growth to slow in the months and quarters ahead. We are expecting that to happen. It would be normal, and that would not indicate poor macroeconomic performance.”

Got that? Bad news may well be bad news, but that bad news isn't actually bad because at this point in the seven-year old "recovery", bad is in fact normal.

Here's more: 

The latest job numbers come out on Friday, and will be closely parsed for clues about how it might influence the Fed. A dip in September to growth of 140,000 jobs caused doubt about whether the Fed could follow through with its rate hike plans.

 

Bullard, speaking in a conference room at the St. Louis Fed, said explaining any downturn in jobs is one of several struggles the Fed may face not just in approving its "liftoff" rate hike, but in the longer battle to raise rates to a near-normal level.

 

It has been nearly a decade since the Fed last approved a rate increase, and Bullard said it is an open question how members will return to a meeting-by-meeting judgment of whether to move higher.

 

"The committee is not used to thinking in those terms because we have been at zero for so long. When is the next move and why? That will be a healthy debate," Bullard said.

Yes, it's a "healthy debate," but if we're supposed to read between the lines, it looks like Bullard is saying that despite this week's Congressional come-to-Jesus moment (see here) the Fed is looking for ways to explain to the public why horrendous jobs data is compatible with a rate hike...

 

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Fri, 11/06/2015 - 09:14 | 6757284 Beowulf55
Beowulf55's picture

THEY WILL NEVER RAISE RATES................

Fri, 11/06/2015 - 09:16 | 6757288 VinceFostersGhost
VinceFostersGhost's picture

 

 

Slowing Jobs Is Good For The Economy

 

Hold it down everyone.....I gotta hear this.

Fri, 11/06/2015 - 09:22 | 6757304 fudge
fudge's picture

yeah that and this

and that would not indicate poor macroeconomic performance

this is some funny shit :D :D :D

Fri, 11/06/2015 - 09:33 | 6757344 GMadScientist
GMadScientist's picture

Can someone please ask the Romulan to define aggregate income for us?

Fri, 11/06/2015 - 09:42 | 6757414 TeamDepends
TeamDepends's picture

Hey everyone, COMEX is having a going-out-of-business inventory-reduction (it's all gotta go!) fire sale! Now y'all git down to your LCS and do your patriotic duty, y'hear?

Fri, 11/06/2015 - 09:57 | 6757529 two hoots
two hoots's picture

 

If slow job growth is good for the economy then NO jobs would be great?  Where is the transition point?

 

Fri, 11/06/2015 - 10:18 | 6757644 Occident Mortal
Occident Mortal's picture

This article suddenly seems very very OLD.

Fri, 11/06/2015 - 09:19 | 6757297 Kprime
Kprime's picture

they simply can't

Fri, 11/06/2015 - 09:26 | 6757321 Boer Soldaat
Boer Soldaat's picture

The FEDS not worried. Soon they'l make the "difficult" yet heroic decision to go NIRP.

Fri, 11/06/2015 - 10:33 | 6757705 Arnold
Arnold's picture

And if they do.......

Fri, 11/06/2015 - 09:14 | 6757285 gmak
gmak's picture

The bottom line is they have to do a rate hike or lose all credibility. The catch is finding the right lies to tell this time, so that they don't lose credibility when they do hike.

 

Damned if you do. Damned if you don't.  How are those thumbscrews feeling?

Fri, 11/06/2015 - 09:32 | 6757340 GMadScientist
GMadScientist's picture

How exactly does one lose what one never had in the first fucking place?

Fri, 11/06/2015 - 09:17 | 6757291 Slomotrainwreck
Slomotrainwreck's picture

let's get something straight here. The word "Economy" is synonymous with the word "Tax revenue". Always was, always will be.

Fri, 11/06/2015 - 09:19 | 6757296 ISEEIT
ISEEIT's picture

Team calniggula could easily torpedo janet with an under 100k print.

Fri, 11/06/2015 - 09:20 | 6757300 Orwell was right
Orwell was right's picture

I tend to agree that the FED is boxed in and has to make a token effort.....but I don't expect the effort to be sustained.  

Fri, 11/06/2015 - 09:22 | 6757305 CHoward
CHoward's picture

If I were schizophrenic all of this would make perfect sense. Of course!

Fri, 11/06/2015 - 09:24 | 6757310 adr
adr's picture

"Institutional Investors Group on Climate Change, a group representing 118 investors, has urged the European Union to phase out outdated laboratory tests for vehicle emissions and replace them in favour of on-the-road monitoring for both CO2 and NOx emissions."

In case you missed it. Here is one of the most important stories of the year. The VW scandal is mostly trumped up bullshit to push an agenda. Read it carefully. On-the-road monitoring, as in devices installed in your car to read and report actual emissions.

Which can only lead to a direct tax on your own carbon emissions. Like data caps on internet usage, you may be given a CO2 quota and not be able to drive without paying a penalty.

Of course "green" cars like Tesla will be exempt because they don't emit CO2.

When you can't get people to change, you must force them to change. Oh and pay you lots of money while you force them.

Always look for the real story.

Fri, 11/06/2015 - 09:41 | 6757406 sgorem
sgorem's picture

let's not forget the GPS chip for 24/7 "monitoring", or the THC smoke level detector, and let's not forget the backseat "pressure guage" for when you're humping ole Betsy @ the drive-in. sorry, there aren't any drive-ins anymore.............whatthefuck!!!

Fri, 11/06/2015 - 09:27 | 6757311 TK69
TK69's picture

Techonology marches on.  It takes less people to do more things and at a lower cost.  It is called productivity gains.

 

ANd btw, the fed does not raise or lower interest rates, markets do.  And currrently banks are not lending to other banks which means little or no interest.  The Fed paying interest on excess reserves is only a bailout and not the couae of low interest rates, to the well connected.

Fri, 11/06/2015 - 09:30 | 6757331 silverer
silverer's picture

Productivity gains are good.  But the government squandered and wasted it all.  Pointless.  Shameful.  Nobody has what they really worked for.  And some people have what they didn't work for.  Misallocation and waste, zero addition to productivity.  You make a good point.  Productivity gains used to be available through hiring labor.  Now the gains come from eliminating human labor.  The word is "doomed" I think.

Fri, 11/06/2015 - 09:35 | 6757358 TK69
TK69's picture

Even the so called poor has access to cell phones.  They have access to a lot more too.  

The bubble that so many people complain about is the various government, not the markets.  They can no longer compete. They can no longer grow.  The fed gov only grows because it can create an unlimited about of IOUs.  BUt over time they will be able to enforce less and less.  And this is good for ecnomomies.  Technology is making so that the masses are starting to be able to evade restriction and taxes. ANd it is making it so that the poor can afford more, not less, over time.  

Fri, 11/06/2015 - 09:32 | 6757339 humanstakeaction
humanstakeaction's picture

Slowing treasury demand from China, now that would be a real rate hike.

Fri, 11/06/2015 - 09:39 | 6757395 TK69
TK69's picture

HOw do you figure that?  China printes their money to buy treasuries.  US dollars buy US goods.  Money, for the most part, does not leave borders.   ANd Congress can issue an unlimited number of US IOUS which can be redeemed at face value by the fed, thus reimbusing the primary dealers.  And don't forget interest paid by the federal reserve (minus expenses) go back to the Treasury.

Fri, 11/06/2015 - 09:26 | 6757316 colddirt
colddirt's picture

That look says "sharted"?

Fri, 11/06/2015 - 09:41 | 6757407 GMadScientist
GMadScientist's picture

That's what happens to a vampire when you hold a 1908 St. Gauden's No Motto Double Eagle up to it and say "fiat begone!"

Fri, 11/06/2015 - 09:26 | 6757318 silverer
silverer's picture

Yes, and jumping off a cliff is good too.  You get a lot more available fresh air rushing past your face.

Fri, 11/06/2015 - 09:28 | 6757325 NotApplicable
NotApplicable's picture

Gee, he's not finally noting the theraputic value of a bust, now is he?

Fri, 11/06/2015 - 09:29 | 6757330 whitelivesmatter
whitelivesmatter's picture

Celebrate your death, goy!

Fri, 11/06/2015 - 09:31 | 6757336 GMadScientist
GMadScientist's picture

Get back on the Kibbutz. You're frightening the children Etai.

Fri, 11/06/2015 - 09:30 | 6757332 GMadScientist
GMadScientist's picture

Pssst...keep it on the QT, but the Fed is no longer relevant. Raise rates. Don't raise rates. Neither will get the corporate, national, or private debt trajectory back on course before it's too late.

Fri, 11/06/2015 - 09:30 | 6757333 NoWayJose
NoWayJose's picture

The Fed has convinced markets that it will raise rates - so it probably will - but the real challenge will be explaining why they have to lower them again a few months later!

Fri, 11/06/2015 - 09:37 | 6757368 GMadScientist
GMadScientist's picture

I'm sure some tragic excuse will come along when needed.

You forget that the Fed is required neither to be consistent nor rational.

Fri, 11/06/2015 - 09:33 | 6757345 nathan1234
nathan1234's picture

Bollocks to Bullshitter Bullard

Fri, 11/06/2015 - 09:38 | 6757382 GMadScientist
GMadScientist's picture

..Bullard's Bombastic Bandini Bombardment

Fri, 11/06/2015 - 09:35 | 6757363 Mewa
Mewa's picture

Fed just admitted that the BLS are totally fabricated and garbage....Reset to reality being forced on them because they cannot keep the lying going any longer.....

Lookout below on the stock market....lower job creation is lower demand - lower productivity and higher debt/GDP....bye bye US credit rating....

time to pay the price...economic reality....

Fri, 11/06/2015 - 09:37 | 6757377 Spungo
Spungo's picture

Telus just fired 1500 people in Canada. Their recovery is almost as strong as ours. 

Fri, 11/06/2015 - 09:39 | 6757388 GMadScientist
GMadScientist's picture

Oh, these green shoots (scores!) are just getting started.

Fri, 11/06/2015 - 11:16 | 6757875 general ambivalent
general ambivalent's picture

Wrong. Telus just increased anticipated revenue by over 150 million.

Fri, 11/06/2015 - 09:43 | 6757420 Bernoulli
Bernoulli's picture

Come on "investors", wake up. It's simple:

1) Imagine loading a pile of stones on a house of cards. Already the first stone will make it collapse (but nobody would do it because everybody knows a house of cards can't handle stones --> the FED can't raise rates

2) As a consequence: Bad news is bad news (because how can more of the same stuff that didn't work for 7 years be good news? how could NIRP be good news?).

3) And finally: Good news is also bad news, because it's most likely based on wrong interpretation of correct numbers or correct interpretation of falsified numbers or it's just made up.

 

 

Fri, 11/06/2015 - 09:52 | 6757495 Crocodile
Crocodile's picture

You just made my head spin; thumbs up!

Fri, 11/06/2015 - 09:44 | 6757439 Falconsixone
Falconsixone's picture

theyve beed doing it for 8 fucking years.....?

Fri, 11/06/2015 - 09:45 | 6757445 TK69
TK69's picture

How many people are starting their own businesses?  Are these not reflected in such numbers too?

Fri, 11/06/2015 - 09:48 | 6757468 Crocodile
Crocodile's picture

That is negative and declining further; assuming you are talking small business start ups.

 

"The U.S. now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does.

We are behind in starting new firms per capita, and this is our single most serious economic problem. Yet it seems like a secret. You never see it mentioned in the media, nor hear from a politician that, for the first time in 35 years, American business deaths now outnumber business births."

 

http://www.gallup.com/businessjournal/180431/american-entrepreneurship-d...

Fri, 11/06/2015 - 09:51 | 6757485 TK69
TK69's picture

Would you put UBer in that boat?  How many business are under the table?  How many pay cash and don't need additional employees?

Fri, 11/06/2015 - 09:46 | 6757451 Crocodile
Crocodile's picture

The numbers are a green light for a rate hike; 271K and 5.0% unemployment...all good news, which s the new bad news.  Of course in a month that number will be revised downward by anyone's guess. 

 

The PPT will bee working early and often today.

 

Of course 15-25bp's is not really a rate hike, which tells us all the true state of affairs.  This is contrary to the overall goal of negative interest rates and the banning of cash to force people to do more things they do not want to do. 

 

BTW - they will not raise rates unless it is 15bp and they have promised many backroom deals to keep the free buybacks, revese repos and other mechanism is play.  They have had plenty of time to do so.

Fri, 11/06/2015 - 09:53 | 6757496 Son of Captain Nemo
Son of Captain Nemo's picture

Does anyone know where the minute hand is on the "Doomsday Clock" these dayz?!!!

I'm sure Janet knows but she ain't tellin!...

Fri, 11/06/2015 - 09:56 | 6757521 PhiBetaZappa
PhiBetaZappa's picture

If slowing jobs are good - no jobs at all will be great for the economy - BULLard

Fri, 11/06/2015 - 10:05 | 6757578 RaceToTheBottom
RaceToTheBottom's picture

Since they have not had daily discussions about rates for about 10 years, they are definitely going to be rusty.  

I suggest they use 70s and 80s level Russian Politburo as examples of how to act.

Fri, 11/06/2015 - 10:10 | 6757601 VW Nerd
VW Nerd's picture

When you try to hide a steaming pile of bull shit with more bull shit, you get a bigger pile of steaming bull shit.  The rate decision and cover story justification are determined ahead of time by the Fed "bus driver".  The market direction and target level after the decision and  are determined by the Fed "bus driver".  Janet will park the bus wherever it chooses.  This is why I put little credance in chart analysis these days....corrupt (made up)data.

Fri, 11/06/2015 - 10:48 | 6757764 PrimalScream
PrimalScream's picture

the FED'S biggest headache ...

convincing anyone why these people should get more than $1/year for an annual salary.

Fri, 11/06/2015 - 11:30 | 6757935 Consuelo
Consuelo's picture

MOOKS...!!!

 

Well, someone has to stand in for the headbanger, right...?

Fri, 11/06/2015 - 11:37 | 6757971 bobdog54
bobdog54's picture

Braindead, crooked or both... 

Fri, 11/06/2015 - 11:48 | 6758023 the grateful un...
the grateful unemployed's picture

in ten years america is going to look a lot like India, the poor will be desperately poor, the rich may be comfortable, government jobs are manna from heaven. hey i think we're already there...

Fri, 11/06/2015 - 12:05 | 6758097 fowlerja
fowlerja's picture

In the new normal... bad news is good news...an example...I did not pay my rent this month..but guess what...maybe that's bad news for the landlord...but I now have some money for buying a new TV, updating my cellphone, doing some much needed gambling at the casino, and getting that necessary massage I have been promising myself...this is good news for the economy...wow!, let's do this again..

Fri, 11/06/2015 - 12:08 | 6758112 Herdee
Herdee's picture

Here's the world problem that is overseeing the present global economic activity.Within one hundred years it is estimated that to just sustain the world's populalation which is growing exponentially it will take five earths to keep up industrial production.That's if we stay in the present economic format along with proxy wars.In other words,the whole world wants to live like Europe and the United States and you can expect massive environmental destruction and global warning if the present economic path we are all on doesn't change.That includes the philosophy behind investing and the stock market.That in a nutshell is really what the CIA and its NeoCons are afraid of,its change.They will do anything they can in their power to stay the present course.

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