Watch Live: Jay Powell Explains Why He Hiked Rates As Economy Weakens At Fed Presser

As 'hard' economic data in the US slumps to 7-month lows, Fed Chair Jay Powell just hiked rates 25bps and promised more to come... we look forward to hearing his explanation...


Probably nothing...


Watch live (feed due to start at 1430ET)...


zvzzt RibbitFreedom Wed, 06/13/2018 - 14:51 Permalink

The discrepancy between EUR and US is becoming almost insane:

US 10-yr yields @ ~3%

DE 10-yr @ 0.48%

US 2-yr @ 2.6%

DE 2-yr @ -0.6% (was minus ~0.84% mid-May)

I'm not a genius, but I'm smelling a very big arbitrage trade opportunity... 

Even more laughable:

IT 2-yr @ ~0.95%

IT 10yr @ 2.8%


I'm (kinda) proud to say: things have become nearly incomprehensible for my tiny brain.... 


In reply to by RibbitFreedom

zvzzt hxc Wed, 06/13/2018 - 15:55 Permalink

Could be. (Thinking out loud here and no scientific numbers (and based in NL):

* energy costs stable (still paying roughly EUR 190 a month for power/gas/water a month which is roughly the same as 3-5 years ago (4 people in 200m2 house)

* gas/petrol EUR 1.60-1.65/L (same/slightly higher)

* healthcare EUR 90-95 per month (190 for the whole family), slightly higher than 3-5 years ago 

* food: stable with some sneaky hidden inflation visible: package of 100 grams XYZ now weighs 94 grams (stuff like that). 

* booze: same or cheaper and good deals available every day (crate of Heineken (or similar mainstream brand) ~EUR 10 for 24 bottles. 

* restaurants: definitely cheaper (way to many around, loads are going to get killed in a slight down turn). With 'social deals' prices have become ridiculous; EUR 12-14 for a decent three course meal which is impossible  - the patron just hopes you wash it all down with at least 10 beers. 

* taxes: income tax & capital gains tax = the same, property tax slightly lower (@ 0.076% x value), VAT the same (was raised a few years ago)

My feeling is that overall expenses are the same or slightly higher than 5 years ago. There was a huge difference when we switched to the EUR though. That was a very painful period. In any case, I was very shocked when reading about US property tax levels and increase in health care costs. 

Also interesting is the minimum wage (lots of age tiers, so based everything on the maximum tier: 40 hours a week, 23+ years of age

2013: EUR 1477 a month

2018: EUR 1595 a month (~9.10/hr)

An increase of 8% over 5 years.


In reply to by hxc

enough of this Wed, 06/13/2018 - 14:30 Permalink

The Fed and Jay know they went too far to boost the stock market artificially to all-time highs while destroying real price discovery . 

The markets have had a ten-year bull run. The Fed needs head room to lower interest rates later when the SHTF and the economy tanks.  Unfortunately, the Fed's move in boosting rates is too little too late.  Strap yourself in.

TeethVillage88s enough of this Wed, 06/13/2018 - 17:28 Permalink

Soooo... Pensions, Retirement Funds,... Fixed Income Citizen are unknown to you?  Companies get LBOs, Mergers, Failures, and the Pensions Dissolve Every Year... by plan... by intention... by RICO... PBGC pay out over $5 Billion a year, every year since the system operates on automatic pilot... US Retirement like UK Retirement is an Illusion/Fantasy/Racketeering/Con Job

Monthly Treasury Report 30 Sep 2002, shows Pension Benefit Guaranty Corporation under Department of Labor

2016 Pension Benefit Guaranty Corporation outlays = $6.2 Billion
2015 Pension Benefit Guaranty Corporation outlays = $6.1 Billion
2014 Pension Benefit Guaranty Corporation outlays = $6 Billion
2013 Pension Benefit Guaranty Corporation outlays = $5.9 Billion
2012 Pension Benefit Guaranty Corporation outlays = $5.9 Billion
2011 Pension Benefit Guaranty Corporation outlays = $5.9 Billion

2010 Pension Benefit Guaranty Corporation outlays = $5.6 Billion (new Normal)
2009 Pension Benefit Guaranty Corporation outlays = $4.7 Billion
2008 Pension Benefit Guaranty Corporation outlays = $4.7 Billion
2007 Pension Benefit Guaranty Corporation outlays = $4.6 Billion
2006 Pension Benefit Guaranty Corporation outlays = $4.4 Billion
2005 Pension Benefit Guaranty Corporation outlays = $3.6 Billion
2004 Pension Benefit Guaranty Corporation outlays = $3.2 Billion
2003 Pension Benefit Guaranty Corporation outlays = $2.5 Billion
2002 Pension Benefit Guaranty Corporation outlays = $2.1 Billion
2001 Pension Benefit Guaranty Corporation outlays = $1.4 Billion


In reply to by enough of this

Endgame Napoleon gatorengineer Wed, 06/13/2018 - 15:25 Permalink

I think you both misunderstand what drove the Trump victory. It was not a deluded electorate, thinking we had a great, full-employment economy, but rather a group of voters who refused to pretend anymore that what we had was anything but an economy full of welfare-supported legal / illegal immigrants, working part time, and an even bigger bunch of underemployed / under-housed citizens.

Few Trumpers went into the booth to vote for this renegade candidate, thinking that more mayhem on the streets was a distant possibility due to the thriving economy.

The midterm and presidential election voters are two different groups, with the mid-term people being more doctrinaire in their conservatism, but if you watched the midterm in PA, you might have noticed a wave of sentiment against the tax cuts. Voters fear that the fiscal irresponsibility of a debt-based tax cut will tank SS. Middle-aged & older people show up more in all elections, but especially in the midterms.

Of course, these rate hikes might help with SS-revenue generation if more business owners create revenue-generating jobs, rather than just investing in stock buybacks. If Keynesian-financed consumption slows due to interest-rate hikes, it’ll be good for fiscal solvency, but if people stop spending too much, it could backfire for job creation. Lower sales means less jobs for plebes.

In reply to by gatorengineer

gatorengineer Endgame Napoleon Wed, 06/13/2018 - 15:41 Permalink

I dont disagree with your premise except one part.  For businesses to create jobs, whether it be slinging a $6 beer, or a Billion dollar refinery upgrade, there has to be demand, and there simply isnt.  There is no next big thing comming or in the pipe line to drive it.  Instead we are seeing an increase in productivity due to automation which is eliminating jobs, which decreases money people have to spend which decreases demand....  We are in a negative feedback loop which only can be broken by seismic change.  One of those changes would be deporting 30million or so illegals, and quashing the H1b Program which would force wages up.....

In reply to by Endgame Napoleon

Endgame Napoleon Troy Ounce Wed, 06/13/2018 - 15:34 Permalink

....except all of the Tylers and all of the bloggers aggregated onto this site.....

The MSM is oblivious to it. They are paid so much that interest-rate hikes are just pocket change. 

And MSMers have never cared about the penny arcade, posing as a labor market. 

MSMers act like federal employees with civil service status, unworried about the job market tumult since they’ll get their $80k raised up, regardless of what the FED does.

In reply to by Troy Ounce