Evans Flips From Hawkish To Dovish, Says Fed "Could Wait Until December" Before Next Hike

Earlier today, NY Fed president Bill Dudley sparked a hawkish storm in the markets, when in a bizarre statement he doubled down on the Yellen's "hawkish hike" rhetoric, and  made it seem that easing is now perceived by the Fed as a bad thing:

  • FED'S DUDLEY: HALTING TIGHTENING CYCLE NOW WOULD IMPERIL ECONOMY

Then moments ago, today's second Fed speaker of the day, Chicago Fed's dovish, FOMC voter Charles Evans delivered a Dr. Jekyll and Mr. Hyde statement, where first, in his prepared remarks and during the subsequent Q&A in New York he sounded rather hawkish, while speaking to reporters after the event he flipped at emerged as his usual old dovish self.

First, here are the highlights from the dovish Evans:

  • “I think where we are with the funds rate right now is kind of in line with my outlook.”
  • "US fundamentals are good, no reason this won't continue"
  • Evans sees a "high threshold to change the Fed's balance sheet unwind plan"
  • Evans said there are only "small differences" in whether the FOMC hiked rates 2, 3, or 4 times in 2017.
  • Evans says he didn’t dissent last week because “we’re at a point where the real economy is really doing quite well”
  • Evans agreed with Yellen and others that the reductions in the balance sheet should gradual and like "watching paint dry".
  • “I can’t just sort of say, it’s without risk to continue with very accommodative low interest rates"
  • “Beginning to adjust the balance sheet is one of the easier, more natural things to do, soon, sometime this year"

He also said something which really doesn't make any sense, to wit: “I want to assure you that if we know things are going wrong we will act.” The statement is clearly meaningless because on countless occasions the Fed has said it has no way of seeing asset bubbles in advance, and since an asset bubble is the biggest risk facing global markets, one wonders just how the Fed could know that "things are going wrong."

And then as he was leaving, the dovish Evans we all know so well, made a surprise appearance:

  • “We could wait until December” and assess the data and still be able to get the three hikes in which are implied by the median dot in the latest quarterly Fed forecast
  • “I think it’s going to be important to see several months of markedly better inflation data.”
  • “I think that it’s about the policy path from here that is the risky part. Now, it could be that we’ve already gone too far. I don’t think that’s the case”
  • “I think if we were to race to a higher funds rate too quickly without seeing improvements in inflation, that could be quite a concern. And it’s that part that I think where we need to stop and kind of go, you know -- I just think the message out of the conservative central banking story was, we need to get inflation to 2 percent”: Evans

His non-committal conclusion was that “we’re at a point where we’d be well- served to meaningfully monitor the data.”

During his speech, the dollar initially strengthened, then weakened, but since the end of his speech it has resumed its autopilot move higher as Dudley's comments clearly take presedence, bizarre as they may have been.

Comments

philipat SloMoe Mon, 06/19/2017 - 20:44 Permalink

I don't recall who made the original quote to the effect "Telling the truth is not high on the Fed's list of priorities". However, this has now been overtaken by time to the extent that I suggest it needs modifying to say "The Fed's first responsibility is to deceive the public and manage the perception economy". Whilst true, strangely enough I don't see this anywhere in the Fed's Charter?In particular Dudley's comments that an inverted yield curve isn't a bad indicator for the economy (despite a large body of historical FACT to suggest otherwise) or that Quantitative tightening ("QT") will not have the opposite effect to QE (despite the obvious fact that QE alone is responsible for the "economic recovery") have no credibility whatsoever. Except, of course, to the "markets" which promptly rallied to new highs.The only thing that can be said is that we are so far down the dystopian rabbit hole that what event/when we go B2R is almost irrelevant at this stage.

In reply to by SloMoe

Hitlery_4_Dictator order66 Mon, 06/19/2017 - 20:22 Permalink

Read it and weap, there is no escape:Like my banking contacts said;When the reset happens after the trigger event, the New US currency will be totally digital. There will be money but the only money allowed will be the dollars connected to the universal digital system. So all these crypto-curriences will be illegal. Bartering will be illegal including using gold and silver. They (Gold & Silver) must be cashed in to the digital bank system. Bartering or using gold and silver outside the digital system will be like selling illegal drugs on the street. You will be a criminal, this may go for hording as well.There will be no more “Brick and Mortar” banks. Plans are already set to abandon them all and become like; USAA.com. a totally digital bank with no brick and mortar bank branches. A bank that will provide everything from insurance, investing and banking. Everything to do with money.Everything in all financial accounts will be devalued on the average 50%. Including with this haircut, prices and wages will fall about 50%, just like what happened in 1929 to 1935. It will be too expensive for brick and mortar retail; thus, from scoops to nuts, food to cloths, everything will be digital and on line and will be delivered.Due to the devaluation everyone with a debt instrument connected to what they have will lose it unless they can pay of the balance of the devalued property against the principle on the per-devalued property.Being outside the digital system you can’t pay tour taxes, thus you lose your debt free home and car if you don’t join the digital system.We are already seeing some prices fall, stores encouraging on line shopping and leasing and renting not owning. When I purchased my last car, the dealer told me they make more money leasing over selling a car and they can put the customer in a better car than he could afford if he purchased a car.The patient already has terminal, the cancer is just now beginning to appear and it’s just a matter of time.

In reply to by order66

nmewn Hitlery_4_Dictator Mon, 06/19/2017 - 20:31 Permalink

"There will be money but the only money allowed will be the dollars connected to the universal digital system. So all these crypto-curriences will be illegal. Bartering will be illegal including using gold and silver. They (Gold & Silver) must be cashed in to the digital bank system. Bartering or using gold and silver outside the digital system will be like selling illegal drugs on the street. You will be a criminal, this may go for hording as well."They will die of lead poisoning, mark my words ;-)

In reply to by Hitlery_4_Dictator

choco bunny Mon, 06/19/2017 - 20:29 Permalink

We will never get the story straight.  The only real question is whether or not the fed will be willing to let the economy tank just to blame it on Trump. There is good chance of that. So eventually Zerohedge and most of us on here will get our market crash. In the mean time the market signals form Shepwave have been working just fine. New highs in sandp just like they said. 

small axe Mon, 06/19/2017 - 20:33 Permalink

the hubris of the Fed ego defies belief. Always right no matter how absurd, and all their cock and bull dedicated to fueling the banker's greed.rot in hell, Federales

montresor (not verified) Mon, 06/19/2017 - 21:04 Permalink

No they can't ever sell the balance sheet.. Because the securities on their balance sheet are fraudulent.. They can't put fraudulent securities on bank balance sheets without capitulating the system.. They're stuck..

silverer Mon, 06/19/2017 - 21:13 Permalink

I'm starting to picture the "Far Side". I try to imagine how these Fed gatherings would be characterized by one of my favorite cartoonists, Gary Larsen. (Yes, it's gotten to this!) lol

gold rubeberg Tue, 06/20/2017 - 01:08 Permalink

"FED'S DUDLEY: HALTING TIGHTENING CYCLE NOW WOULD IMPERIL ECONOMY"

Got news for ya, Dud. You already imperiled the economy by waiting so long to get started.

Batman11 Tue, 06/20/2017 - 05:19 Permalink

The average citizen v's Central bank PhDs.The early 1980s see the beginnings of financial liberalisation and the late 1980s sees the following crises, e.g. US S&L crisis; UK, Japan, Australia, Canada and Scandinavia real estate busts.More financial deregulation leads to 2008; the Euro-zone crisis; Irish, Greek and Spanish real estate crashes.2008 is just another real estate bust, leveraged up and transmitted internationally by complex financial instruments. As the global bust hits the Euro-zone, it crumbles.That’s another fine mess financial liberalisation has got us into.Australia, Canada and Scandinavia are queuing up for their second real estate bust.The independent Central Bankers of the era don’t seem to know what’s going on and keep letting these bubbles blow up and then burst."Try looking at real estate for a start you fools" average citizen with IQ of 100The independent Central bank and financial stability are mutually exclusive. https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png“1929 and 2008 look very similar, too much debt is going into the system” average citizen with IQ of 100Debt being created for financial speculation that doesn’t provide the same return in GDP.Steve Keen was looking here and saw it coming in 2005.The FED ......... the independent Central Bank and financial stability are mutually exclusive. Average Citizen 2 Central Bank PhDs 0