Bank Of America Explains What Federer's Victory Means For Fed Monetary Policy

On Sunday, Roger Federer did what many in recent years said was impossible, when he won his record, 8th Wimbledon title, defeating Croatia's Cilic in straight sets.

Away from the court, the victory may be an ominous sign for EM bears. As Bloomberg's Marc Cudmore said earlier this week, when he explained why he more focused on this Fed rather than the one run by Janet Yellen, "The Fed" has won seven of the past 14 championships. In every year he’s been victorious, both the MSCI EM Currency Index and the MSCI EM Equity Index have gained. By contrast, in five of the seven years he hasn’t finished triumphant, both those indexes have dropped.

That did not mark the end of "Fed vs Fed" spurious correlation.

As Bank of America's Chris Flanagan writes in a note on Sunday, "curious as it may be, Federer's trajectories have mirrored those of the FOMC's rate path; steadily rising in the mid-2000s, pausing since the crisis, and gradually normalizing back over the last two years."

Apparently with no more fundamental analysis left, BofA - bored and fascinated by tennis instead - writes that "this coincidence is likely to run into September... setting Federer up to reclaim his title, King of Queens, at Arthur Ashe Stadium for the sixth time."

BofA's conclusion: "Should this historic coincidence come to pass, it yet again clears the path for another historic shift in monetary policy, for the FOMC to start balance sheet reduction in September."

And just like that, algos will now buy stocks on every flashing red Federer headline.


Silver Savior Rick Cerone Mon, 07/17/2017 - 01:01 Permalink

I never really bothered with bitcoin. I do the alt coins. Trying to spend all that money on just one coin is crazy. It is useful though when I transfer funds from one exchange to another and when buying silver. I might buy some if it gets to $100. I prefer Lite Coin, XRP, Stellar, and Ethereum. Oh yeah and Bitcoin is slow as fuck.

In reply to by Rick Cerone

Batman11 Sun, 07/16/2017 - 18:37 Permalink

It is a pity Ben Bernanke didn’t study the cause of the Great Depression rather than the Great Depression itself.The 1920s roared with debt based consumption and debt based speculation before everything tipped over into the Great Depression. and 2008 stick out like sore thumbs; bank credit going into financial speculation and stocks (1929) or real estate (2008).Leveraged financial speculation with bank credit.If he’d studied the bit before 1929, rather than the bit after 1929, all this unpleasantness could have been avoided.

any_mouse Batman11 Sun, 07/16/2017 - 19:02 Permalink

FED actions before caused the crash. The deep wealthy were out of the market beforehand.

FED actions during delayed the recovery. The deep wealthy were not yet done stealing the nation at rock bottom prices.

FDR's Gold Confiscation affected private individual Americans. It did not apply to institutions that dealt commercially in Gold. The mine owners and the banking houses. Gold was legally moved out of the USA to the City of London.

After Gold was revalued from $20 to $35 the Gold was brought back to the USA for instant profit by Government decree.

Chicago pales in comparison with Washington, DC and the FED.

In reply to by Batman11

Silver Savior Mon, 07/17/2017 - 01:04 Permalink

Fuck Bank of America. Always a line of people out the door and only one or two tellers. But they do have that service rep asking everyone in line why they are waiting in line then she tells you to wait in line. I am hearing so many you tube stories of them putting holds on big transactions and stuff and it's weirding me out. I am going to a community bank. This whole financial system fucking sucks.