During a post-presentation Q&A in Chicago this morning, Atlanta Fed head Dennis Lockhart warned investors that Brexit is a notable risk and was a consideration within Fed policy meetings (along with every global nation's problems, we presume). However, it was his follow-up comment that has created notable chatter among the "mandate-driven","data-dependent" Fed watching community when he said that any Brexit issues "shouldn't stop the music" for The Fed.
While the market is still enjoying the post-NFP weekly data lull, economic data starts to pick up again in the coming days, alongside the start of the reporting season. Below are this week's key events.
Those betting against Goldman Sach’s retail investment advice have generally been on the right side of things. The same thing is about to happen again. “Short gold! Sell gold!” said Goldman’s head commodity trader, Jeff Currie, during a CNBC “Power Lunch” interview. Currie’s advice was in response to the question “Is there any commodity you are recommending that can help our viewers make some money?” Currie’s provided several reasons for shorting gold, blatantly wrong.
It may be almost impossible to underestimate the gullibility of professional Fed watchers. At least Lucy van Pelt needed to place an actual football on the ground to fool poor Charlie Brown. But in today’s high stakes game of Federal Reserve mind reading, the Fed doesn’t even have to make a halfway convincing bluff to make the markets look foolish.
Former Fed President: "Living In Constant Fear Of Market Reaction Is Not How You Manage Central Bank Policy"Submitted by Tyler Durden on 03/30/2016 09:29 -0400
Back in January Fisher said (what even Liesman has now suggested) that "We Frontloaded A Tremendous Market Rally" and there is "No Ammo Left", followed by a second appearance earlier this month when he said that the Fed "Injected Cocaine And Heroin Into The System To Create A Wealth Effect." This morning Fisher was again on CNBC to discuss Yellen's dovish speech at the Economic Club of NY, and said that the Fed is "living in a constant fear of a market reaction. This is not how the way you manage central bank policy."
What happened? It's possible the Fed has seen the market reaction and become alarmed by the complacency. It's true, the probabilities for even a June rate hike—let alone April--declined dramatically in the face of the Fed meeting. That may have alarmed the Fed, and so some members may feel the need to keep the markets more alert.
At 2 p.m. EST, the only thing the financial world will care about and discuss will be the Fed's [first rate hike in 9 years|epic disappointment]. So for those who still haven't made up their mind about what the Fed's [dovish|non-dovish] rate hike means, here is all you need to know.
"I am now reasonably satisfied the market situation has settled down... So I am comfortable with moving off zero soon..."
Having reiterated all the key talking points of "data-dependence", "downside risks", "labor slack", and the economy is "improving", The Fed's Dennis Lockhart then admitted...
- LOCKHART: UNDERSTAND WHY PEOPLE MAY GET LITTLE SKEPTICAL OF FED
We wonder just what makes him "understand" the world's growing skepticism?
- Turkey says coalition to launch 'comprehensive battle' against Islamic State (Reuters)
- Buffett’s Celebration Tempered by 50th Anniversary Stock Slump (BBG)
- SEC Set to Approve CEO Pay-Gap Disclosure Rule (WSJ)
- Greece wants full bailout, not bridge loan, ruling party says (Reuters)
- Stocks Rise Fueled by Strong European Corporate Earnings and Chinese Data (WSJ)
- JPMorgan Reclaims Place Among U.S.'s Top 10 Biggest Stocks (BBG)
- Eurozone retail sales fall sharply in June (MW)
"Priced in?" Atlanta Fed's Lockhart is the un-Bullard as he proclaims that September would be "appropriate time" for rate hikes to begin... Stocks have roundtripped from initial excitement to lows of the day, short-end bonds are ugly as the curve flattens dramatically and the USD index is surging...
U.S. and U.K. GDP slowed very sharply in first quarter of 2015. Latest data confirms the rapid slowdown despite stock markets booming in the UK, U.S. and globally. This highlights the major disconnect between the real economy and a financial sector intoxified by easy money.
Sentiment in general remains poor and all the focus is on gold's weakness in dollar terms, despite gold's strong gains in euro terms in 2014 and so far in 2015. Poor sentiment is of course bullish from a contrarian perspective and suggests all the froth has been washed out of the gold market.
A “soft landing” is unlikely.