Boston Fed Says "Markets Are Wrong," Rates Are Going Higher, Sooner

Tyler Durden's picture

Gold and bond prices dropped and stocks popped as yet another open-mouth operation went underway this evening from none other than Boston Fed president Eric Rosengren. Ahead of next week's FOMC meeting, and just days after another Fed president said no April hike, Rosengren spewed firth that "I don't think financial markets have it right." Of course, what this preacher means is that while stock markets are perfectly efficient (and correct), bonds and rate futures areclearly inefficient and "investor outlooks for Fed rate hikes are too pessimistic," because "the US economy is fundamentally sound."

  • *ROSENGREN: GRADUAL FED RATE INCREASES `ABSOLUTELY APPROPRIATE'
  • *FED'S ROSENGREN SAYS U.S. ECONOMY `FUNDAMENTALLY SOUND'
  • *ROSENGREN: INVESTOR OUTLOOK FOR FED RATE HIKES TOO PESSIMISTIC

Seriously!!

 

Of course, after a day of oil/stock rebounds on dismal disappointment in Doha, this makes perfect sense...

Federal Reserve Bank of Boston President Eric Rosengren issued a stark warning to markets Monday, telling traders and investors they are seriously underestimating how many rate rises the U.S. central bank is likely to deliver over the next few years.

 

"I don't think the financial markets have it right," Mr. Rosengren said in a speech given in New Britain, Conn., at Central Connecticut State University.

 

"While I believe that gradual federal-funds rate increases are absolutely appropriate, I do not see that the risks are so elevated, nor the outlook so pessimistic, as to justify the exceptionally shallow interest rate path currently reflected in financial futures markets," he said.

yeah you are probably right - what is wrong with this US economy?

 

Ignore this though he say - it's wrong too!!

  • *ROSENGREN: 1Q GROWTH DISAPPOINTING, JOBS DATA MORE OPTIMISTIC

As WSJ notes, however, Rosengren, currently an FOMC voter, has long skewed toward the dovish end of the Fed scale.

While he's been on board with the Fed raising rates he's definitely banged the drum for moving slowly. So his speech this evening is notable because he puts markets on warning for holding what he views as the wrong outlook on rates.

 

He says nothing about the April FOMC, but that said, if Mr. Rosengren thinks markets are underestimating what the Fed will do, investors and traders might want to listen.

There was some reaction in markets...

 

So - interest-rate markets are wrong; macro data is mostly wrong (apart from the jobs data); and The Fed is right?

As we showeed in our discussion of the Fed’s forecasts, these predictions have continued to fall short of reality.

“Besides being absolutely the worst economic forecasters on the planet, the Fed’s real problem is contained within the table and chart below. Despite the rhetoric of stronger employment and economic growth – plunging imports and exports, falling corporate profits, collapsing manufacturing and falling wages all suggest the economy is in no shape to withstand tighter monetary policy at this juncture.”

FOMC-Economic-Forecasts-031616

“Of course, if the Fed openly suggested a ‘recession’ could well be in the cards, the markets would sell off sharply, consumer confidence would drop and a recession would be pulled forward to the present. This is why “what the Fed says” is much less important than what they do.”

And here is Alan Greenspan meeting with Dixie Noonan et al on March 31, 2010:

This is a reason why the Board is getting an unfair rap on this stuff. We didn’t forecast better than anyone else; we regulated banks that got in trouble like anyone else. Could we have done better? Yes, if we could forecast better. But we can’t. This is why I’m very uncomfortable with the idea of a systemic regulator, because they can’t forecast better.

This comes from the person in charge of the most powerful central bank in the world; a world which now is reliant exclusively on central bankers for its day to day pretend existence.

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Spungo's picture

Don't worry. We are nothing like Japan!

back to basics's picture

Just the fact that these criminal, corrupt scoundrels are allowed to utter even a single word to the financial media should tell you all you need to know about these manipulated markets.

Honey Badger's picture

Stop talking about it you pussy motherfuckers and do it already! You fed cunts are like the boy who cried wolf.

El Oregonian's picture

Well, Mr. Boston Fed president Eric Rosengren, you are fundamentally a lying piece of crap-idiot.

'nuff said.

Verga Biendura's picture

dirty lying motherfucker.. dirty lying motherfucker... dirty lying motherfucker...

MD's picture

And you're a poopie butt, Mr. Boston Fed president!  

Oldwood's picture

It is not their job to predict our economy. It is their job to manipulate it, not necessarily by direct intervention, but by suggestion. Look at what moves the markets. It is not fact and it's not even really their actions, but what utterances that sometimes even nameless voices utter into the darkness. The price of oil is NOT based on anything so factual as supply or DEMAND but what someone suggests supply or demand MIGHT be. Stocks, with prices never higher, are NOT driven by profits or anything so tangible, but what someone suggests their profits MIGHT be in the future. Such is the nature of an economy driven by speculation, gambling and chance, where reality has no place. Fact has no value to a gambler unless he thinks he is the only owner of such a thing, so facts have no value in our markets, only the implication of fact. Normally we shouldn't care what foolish gamblers do, but when we discover they are gambling with OUR lives, all bets are OFF.

SomethingSomethingDarkSide's picture

Yes, there is Jaw Boning, but what really drives the impact of the flowery is the blunt force hatchet of Futures Manipulation.  There is no suggesting here, without futures pumps and dumps on specific assets, markets would not be where they are now.  It may interest you to look into Eric Hunsader and Nanex on Twitter, he is a very smart guy on top of these 'odd movements'.  All your assets are belong to Futures.

Twee Surgeon's picture

Perhaps the Fed will release a statement soon along the lines of "We do not have a clue what is going on even among the branches of our so called Bank, we have achieved complete disunity of thought, from branch to branch of the alleged Bank and we have lost control, we have no idea what Janet or Larry are going to say tomorrow, we are very sorry, we thought we had it nailed, even with a printing press and license to steal and kill, we have screwed it up and we are all going to a Harakiri Party so that you real people can have a life, so sorry."

           Best wishes in your future endeavors when 'shit gets real.'

lester1's picture

All these Fed officials are very gifted actors.

 

There is no way the Fed will risk doing a rate hike in an election year and crash the markets. The Fed works for Obama and to get Hillary elected.

 

Nationalizing the stock market is what the Fed is doing.

Wow72's picture

They will have to, to start to attract people back to the currency or to make it more attractive.  Its pretty ugly right now.

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Wow72 Apr 18, 2016 9:51 PM

I think its because they need room for the coming crash.  The Fed "makes decisions" when they are forced to.  They try to appear to be in control but they are really being thrown around.  If The Fed really controlled things then we wouldn't see a crash in the market every 7-10 years.  The Fed needs a little head room above 0 so that they can drop rates again when the next crash comes.  When we crash again we will go to negative rates but if the first rate drop needs to push the US into negative territory then there will be a lot of political backlash.  The Fed will drop once or twice, show that its not working and then go negative.

i_call_you_my_base's picture

Or they will force the crash to go negative because they're fucking psychos. It's like a general that develops a new weapon, they just can't help themselves, they have to use it.

The Merovingian's picture

Negative numbers go to infinity too .... hello Tokyo .... Here we come

yogibear's picture

All talk and no action.

That 25 bps rate hike is pretty much gone now. 

i_call_you_my_base's picture

Listening to these dumbfucks is painful. Nothing they say makes any sense and is the embodiment of contradiction.

moneybots's picture

Ahead of next week's FOMC meeting, and just days after another Fed president said no April hike, Rosengren spewed firth that "I don't think financial markets have it right."

 

I don't think the FED has any credibility. When the market tanked in 2014, Bullard said that QE shouldn't end and the market took off like a rocket. QE ended and Japan announced more stimulus, to which Bullard then said QE should end and he was misunderstood about his previous comment.

Bullard gamed the market. Can't believe a word Rosengren is saying. If the S&P tanked back to 1,800 Rosengren would be singing a different tune about a rate hike, even if there was nothing different about the economy.


TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Apr 18, 2016 9:48 PM

Told ya!

Bruce's picture

Nothing to see here.  Move along.  Everything's wonderful (until Nov. 9th, one day after the elections).

"The last duty of a central banker is to tell the public the truth." - Alan Blinder, former Vice Chairman of the Federal Reserve, 1994 on the PBS Nightly Business Report

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.” - John Adams, 'Argument in Defense of the Soldiers in the Boston Massacre Trials,' December 1770 US diplomat & politician (1735 - 1826)

“Facts do not cease to exist because they are ignored.” Aldous Huxley

“The truth is incontrovertible. Malice may attack it, ignorance may deride it, but in the end, there it is.” - Winston Churchill

“You can ignore reality, but you can’t ignore the consequences of reality.”  - Ayn Rand

“Everybody, soon or late, sits down to a banquet of consequences.” - Robert Louis Stevenson

“You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.” - Abraham Lincoln, (attributed) 16th president of US (1809 - 1865)

"The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers' stone to make it last." -- Ludwig von Mises (1940)

"Panics do not destroy capital, they merely reveal the extent to which it has been destroyed by its betrayal into hopelessly unproductive works." -- John Mills (1867)

venturen's picture

I hope they jail these frausters along with their biribers at the mega banks

Space Animatoltipap's picture

Rate hikes are very good for gold. No rate hikes also. How can it be otherwise? The autodestruct world of fiat money is simply revealing itself to be just that. Hare Krishna.

Seal's picture

plus O told Janet she couldn't raise before the election

Byte Me's picture

Sound as a FEDbuck.

Yeah.

joego1's picture

Telling the plebs the truth will make the stampede.

ebworthen's picture

Go ahead, put prime at 5% you fucking chickens!

yogibear's picture

LOL, yeah sure they are. What happened to that 25 bps rate hike? Pretty much gone now.

You better get together with the rest of BSers because their talking about negative rates.

Even if the US dollar was free-falling the Federal Reserve would not raise rates to protect the US dollar. \

The Federal Reserve's inaction would be 100% assued. Maybe the BOJ or ECB would step in place of the Fed.

If all three fiats (Euro, Yen and dollar}) were being dumped at the same that  might cause a problem.

 

 

Pareto's picture

“Of course, if the Fed openly suggested a ‘recession’ could well be in the cards, the markets would sell off sharply, consumer confidence would drop and a recession would be pulled forward to the present. This is why “what the Fed says” is much less important than what they do.”

If you want to tax your melon on inverse control theory - lending some credibility to the abover statement, check this piece of work out by Michael Salemi, UNC.

It's What They Do, Not What They Say: How to Infer the Stabilization Objectives of a Central Bank (Michael Salemi).  I needed bread crumbs to find my way back.

Here's the link to the PDF: http://graduateinstitute.ch/files/live/sites/iheid/files/sites/internati...

bluskyes's picture

Fool me once shame on you, Fool me twice ... won't get fooled again!

yogibear's picture

Hey Fed presidents,

We all know your so full of crap.

Your so afraid of the consequences of a normal market and price discovery you'll do whatever it takes to stop normalization.

Keep bluffing, it's not working anymore. 

You can't and won't raise rates any further. Period!

Savyindallas's picture

The Fed will not stop until the sheeeple realize their policies are designed to transfer all of their wealth to to the 1% Tribesmen and their other degenerate 1% criminal allies. The goal is total control of all wealth and the end of freedom and what Democracy we have left. Feudalism is the future  -after that-mass extermination of the useless eaters. The Protocols are real. The NWO of the Luciferian elites seems more likely than ever before. The 2016 plan for the Presidencey is Cruz vs. Hillary. Matters not to them who wins, but they really like Hillary so her odds are about 10 to 1 that she will be the next President.  I hate this  -but that is my assessment. Hope I am wrong. Trump is our only hope  - but even with Trump, there is no probable chance that Americans have the will to take back their country. 

Global Observer's picture

Whether the economy is sound or not, raising interest rates is the last hope for the US to maintain the exchange rate of the US$ vis-a-vis other currencies. The Shanghai Gold Fix has started. China will be setting the price of gold in CNY independent of the price in USD, GBP and EUR. If China sets the price of gold in Shanghai to be higher than the equivalent in USD, there is a huge arbitrage opportunity, to buy gold in London for USD, sell it in Shanghai for CNY and buy any other currency for the CNY. Effectively, China will be shedding its USD holdings for gold. With the Kingdom of Saudi Arabia having announced it will sell its US assets, the demand for the USD will plummet as will its exchange rate against other currencies. The only way left to create any demand for US$ outside US is to raise the interest rates drammatically as Paul Volcker did. It won't arrest the fall of the USD's exchange rate, but is the only option left to attempt it. But I doubt it will be resorted to until the USD starts falling drammatically causing high inflation within the country.

JailBanksters's picture

I'll sum it up with ONE word

ROFL

They didn't exactly go up from the last rate hike, depending on who you were, what day it was, what time of day it was, it was somewhere beteen this and that.

Sky flyer's picture

Something just snapped in metals. Holy shit look at silver around 1:30am central! It's on boys....

pliny the longer's picture

there was a significant hearing yesterday in the DB silver price fixing litigation.  could be related to reading tea leaves on that.  if the plaintiffs are successful, discovery can continue on the extent and parameters of the price fixing and will presumably be made public for those that have eyes to see it.  so could be significant.  there is some good writing on it all here:  http://www.silverseek.com/article/deutschbank-gold-silver-price-manipula...

 

Wow72's picture

This is the day China starts its new gold backed YUAN RIGHT? YES!  Watch out here is where things GET REAL! At some point will China and the world will have all the gold they can get their hands on and when that day comes, ITS REALITY TIME FOR AMERICA.

Aussie Battler's picture

Normalisation.... soon. We await, I'm going grey here lol.

pliny the longer's picture

the markets have it wrong, but this guy, yeah him, he's got it figured out for us!!!  what sort of name would such a smart guy have, you ask?  why, its rosengren.  just let that sink in for a moment:  rosengren.  close eyes, deep breath, rosengren.

'nuff said. 

buzzsaw99's picture

there's a boston fed? who knew?

Wow72's picture

The reason why rates will eventually probably have go up is just like Russia raising their rates to 17%, you do that when everyone thinks your currency is worthless, and we could see that here.  In other words they will raise rates, but not because we have a strong dollar or economy, but because the dollar has been turned into Worthless JUNK and they need to attract people back to a currency that pays interest.  Its the opposite of the good reasons to raise rates, if they do it it will be out of necessity or be forced to at which point the interest on the debt will be our end. 

This raising of rates wont be as much of a problem for gold or silver because the writing will be on the wall, go chasing those higher rates and see where it lands you, with MOAR worthless dollars. This is a very real possiblity, not much more time to get your hands on REAL MONEY Gold and Silver, Once China collects it all, they will take the elevator up, up and away so you can no longer reach it.  Time is wasting.

InsanityIsWinning's picture

Eco 101 - (1) U.S. dollar is world's reserve currency and all commodities are priced in dollars.  All other countries must buy dollars and hold them in reserve . . . they can also purchase US treasuries (very liquid). . . dollars are always in demand. Yes, Euro and Yen are also reserve currencies but as long as everything is priced in dollars, the dollar wins.

(2) All currencies are junk, the US would have to take appropriate steps if for example the Euro or Yen were behaving like adults . . they're not.

(3)  Rising U.S. interest rates would send the dollar soaring . . bad for bullshit corp earnings, bad for weaker currencies that have currency dollar pegs (like the Yuan and the Saudi currency).  bad for stock market.

(4) Rising rates will increase debt service cost . .this would reduce corp stock buybacks, have a deflationary effect on big ticket items like real estate and autos. Also, cost the .gov more on their own debt servicing (although the fed is now the largest holder of our own debt and any interest payment to them is credited back to the treasury)

(5) The fed is trap in a classic liquidity trap, all markets are overvalued based on a false price and risk models . .rising rates will force a repricing across the board . . bubble pops everything goes down 50% and the fed has to reduce rates to negative 10%

The fed will never raise rates again . . . ever, nor will any other central bank.

Wow72's picture

"Eco 101 - (1) U.S. dollar is world's reserve currency and all commodities are priced in dollars. "

China is hard at work trying to change this as we speak.

 

"All currencies are junk"

Then why put your money in them, gold is not junk?

 

"Rising U.S. interest rates would send the dollar soaring"

If the dollars value becomes even less why would you want them without earning interest?  Especially if the YUAN becomes backed?  The dollar is a value losing instrument.  Here is the proof, you want these with negative rates? http://pricedingold.com/us-dollar/  They have already DRAINED YOU. Your being subjected to negative value with every dollar you own.  That should stop. Breaking even in the stock market is losing money to them.  If your breaking even your not even treading water, and thats not including inflation which they want higher inflation? Working for YOU?

 

" Rising rates will increase debt service cost"

It would also make our currency attractive to savers being able to earn interest, which its very unattractive to those people now.

 

"The fed is trap in a classic liquidity trap, all markets are overvalued based on a false price and risk models . .rising rates will force a repricing across the board . . bubble pops everything goes down 50% and the fed has to reduce rates to negative 10%"

So why wouldnt you have some gold?, The problem is going to be when there is a realization that the dollar is worthless and lets say Saudi Starts dumping them, wouldnt it be MOAR attractive if the dollar was still earning 5%?  Do you see the problem here? no room to raise, but they may have to eventually and if they cant they have no way of attracting "investors" back to the dollar.  Just like RUSSIA did with 17% within the last year or two.  That with gold made the Ruble MOAR ATTRACTIVE.  We are going to come to the same place regardless of reserve status, and remember reserve status is a privilege, not a right. 

Russia could raise its rates to 17% and attract people back in to the Ruble because they had very little debt. We are not so fortunate.

Currencies in countries with no debt are the strongest remaining and those countries stockpiling gold along with no debt are rock solid, we are not that.  I would like to see the proof our leaders have actually left any gold or silver in our vault.  With the mentality that they use and the availability of gold and silver, I seriously doubt it. 

Anyone who thinks they "Control" the markets is thinking like an addict thinks, believe me I Know.  No One "Controls" anything.  This is a dishonest system why anyone would want to be part of it is beyond me.  Have at it, but you better perform or you sure as hell wont "make" "money".

InsanityIsWinning's picture

I totally agree with owning gold . . . buy it with both hands and feet.

south40_dreams's picture

Interest rates are a red herring to distract from the constant printing of funny money.  

Rates?  Who cares!!

Wow72's picture

Yes but at least they are "sharing" some of "their" ill gotten value with you and not taking it all.  Interest rates are a jesture of good will if nothing else.  Return some of the stolen goods, so to speak and share and re-tax?  Interest rates should be tax free because of the constant devalution of the currency.

The real reason we are at quarter point is because we cant afford to raise them.  NOT GOOD.