Evan as The "boxed-in" Fed nears the vinegar strokes of its easing cycle, today's statement continued to offer something for everyone (hawks, doves, bulls, & bears) to hold onto:
- *FED DROPS PATIENT STANCE ON INTEREST-RATE RISE GUIDANCE (hawk)
- *FED SAYS ECONOMY `HAS MODERATED SOMEWHAT,' JOB MARKET IMPROVED (dove)
- *FED SEES 2015 GDP GROWTH OF 2.3%-2.7% VS 2.6%-3% DEC. EST. (dove)
- *FED WANTS TO BE `REASONABLY CONFIDENT' ON INFLATION FOR LIFTOFF (hawk)
So, despite previous Fed promises, we have seen dismal macro data, no consumption gain from low gas prices, and USD strength headwinds; and yet, as they shift growth expectations in their dot plot, we're supposed to believe that. The bottom line: Fed to Markets: "you're on your own"-ish: undertainty is back. Full redline below...
Pre-FOMC: S&P Futs 2059, EUR 1.0650, 10Y 2.05%, Gold $1152
- *FED SAYS RATE RISE ALSO TIED TO MORE LABOR-MKT IMPROVEMENT
- *FED: RATE GUIDANCE DOESN'T MEAN FOMC DECIDED ON LIFTOFF TIMING
- *FED SAYS RATE RISE `REMAINS UNLIKELY' AT APRIL FOMC MEETING
- *FED SAYS HOUSING REMAINS SLOW, `EXPORT GROWTH HAS WEAKENED'
- *FED REPEATS INTL DEVELOPMENTS TO BE TAKEN INTO ACCOUNT
- *FED SEES 2015 GDP GROWTH OF 2.3%-2.7% VS 2.6%-3% DEC. EST.
- *FED SEES 2015 JOBLESS RATE 5%-5.2% VS 5.2%-5.3% IN DEC. EST.
- *FED SEES 2015 PCE INFLATION 0.6%-0.8% VS 1%-1.6% IN DEC. EST.
- *FED SEES LONGER-RUN UNEMPLOYMENT RATE 5%-5.2% VS 5.2%-5.5%
Here is what the major changes are:
- Fed notes that recent growth (no longer activity) has "moderated somewhat" instead of "expanding at a solid pace."
- Fed adds that "export growth has weakened"
- Fed removes measures of inflation compensation "have declined substantially" and replaces with "remains low"
- Fed changes "inflation is anticipated to decline further" with "remain near its recent low level"
And then when it comes to the patience language there is a whole lot of crazy stuff going on- for the full redline comparison see below.
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Time to raise rates? Seems like the perfect time!!
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This seemed to sum up The FOMC's decision-making process perfectly...
Timing by Committee pic.twitter.com/w92TJKelwN— Not Jim Cramer (@Not_Jim_Cramer) March 18, 2015
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Here is what the dot-plot looked (and market expectations) looked like before... (notice how much more dovish the market remains)
Word Count rise - bullish
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