Author Topic: FED  (Read 27702 times)

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« Reply #50 on: April 08, 2016, 06:05:52 AM »

Is the Fed losing sight of inflation?
Mark Haefele, global CIO at UBS Wealth Management
8 Hours Ago
COMMENTSJoin the Discussion
Inflation in the U.S. has picked up in recent months, toward the top end of Federal Reserve forecasts.

While several Fed officials remain focused on building inflationary pressures, Fed Chair Janet Yellen has recently struck a dovish tone, stressing her concerns about global growth and financial conditions as reasons to proceed cautiously with interest-rate hikes.

Janet Yellen, chair of the U.S. Federal Reserve
Pete Marovich | Bloomberg | Getty Images
Janet Yellen, chair of the U.S. Federal Reserve
Some investors, balancing the doves' and hawks' views, are concerned the Fed may prioritize "full employment" over price stability, and that, by waiting too long to act, the Fed will be forced into a rapid series of growth-killing hikes. The minutes from the March Federal Open Markets Committee meeting indicated some uncertainty, with a mix of participants' views as to whether the pickup in U.S. prices was "consistent with a firming trend" or was "unlikely to be sustained."

Looking at the data and the Fed's deliberations, should investors be worried that the Fed is losing sight of inflation?

A number of recent data points have helped convince markets that inflation is indeed heading higher. The core personal consumption expenditure index (PCE) rose 1.7 percent year-over-year in both January and February, accelerating from 1.3 percent just five months before. The increase in prices was broad-based.

Janet Yellen
The Fed 'is a god that has failed': George Gilder
Most tellingly, service-sector inflation, as measured by the consumer-price index for services excluding energy, rose 3.1 percent in the year to February. That's important because it closely reflects domestic wage pressures. It finally seems that the low jobless rate, which was at 5 percent in March, is starting to feed through into accelerating inflation.

Trends in foreign exchange and commodity markets have recently been pushing in the same direction. The dollar fell 3.8 percent in March on a trade-weighted basis, its largest monthly decline since September 2010. This has the potential to add to the inflationary momentum by lifting import prices. And the price of oil has now rebounded around 40 percent from February lows, back towards levels seen in December last year.

Yet Yellen has stressed risks to global growth and said she anticipates "only gradual" rate rises over the coming years. This tallies with the view of several Fed members in March "… that a cautious approach to raising rates would be prudent … [noting] their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate."
U.S. President Barack Obama delivers remarks on the economy in the White House press briefing room in Washington April 5, 2016.
Kudlow: This is a war on tax inversions
It is too soon for equity investors to worry that the Fed will need to rush rate increases in order to dampen inflationary pressures. Yellen has made a point of signaling that the Fed will be willing to let inflation run closer to or above target for longer before reacting, judging that the risks of inflation getting out of hand at some point in the future are not as large as the risk of acting too soon and choking economic recovery.
U.S. growth remains moderate. Global overcapacity, a strong trade-weighted dollar, and still tepid external demand should act as a counterbalance to U.S. inflation, even if wage gains surprise more positively.
We should remember that the Fed doesn't set policy in a vacuum. If inflation rates outside the U.S. fail to respond to stimulus and prompt further monetary easing abroad, even slow Fed hikes could lead to the dollar strength that is its own form of tighter monetary policy.
423 Park Avenue in New York.
This real estate market is headed for a crash
The bottom line is that it does not seem as though the Fed is losing sight of inflation, or running behind the curve. Recent economic data and still modest global growth conditions justify only gradual U.S. rate rises through 2016. Still-accommodative Fed policy and an expected pickup in equity earnings support our overweight U.S. equity position in global portfolios, and we still expect equities and credit to end the year higher.

Commentary by Mark Haefele, global chief investment officer at UBS Wealth Management, overseeing the investment strategy for $2 trillion in invested assets. Follow him on LinkedIn at

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« Reply #51 on: April 08, 2016, 08:24:22 AM »

Yellen: Positive about progress in ending 'too big to fail'
Jacob Pramuk   | @jacobpramuk
1 Hour Ago
COMMENTSJoin the Discussion

Federal Reserve Chair Janet Yellen on Thursday touted the strength of the United States economy, rebuffing political rhetoric suggesting a bubble is ready to burst.

"I certainly wouldn't describe this as a bubble economy," Yellen said, noting a "healing" labor market and a 5 percent headline unemployment number.

Yellen appeared on a panel with former Fed Chairs Ben Bernanke, Paul Volcker and Alan Greenspan at the International House in New York. The U.S. central bank heads discussed the U.S. economy and monetary policy around the globe.

Yellen's comments come soon after Republican presidential contender Donald Trump's contention that an economic bubble could burst. Yellen noted that she did not see "imbalances" like "clearly overvalued" asset prices.

Federal Reserve chair Janet Yellen (L to R) and former Federal Reserve chairs Ben Bernanke and Paul Volcker appear together for the first time in New York, April 7, 2016. The panel is geared toward millennials and focused on decision-making with international implications.
Kathy Willens | Pool | Reuters
Federal Reserve chair Janet Yellen (L to R) and former Federal Reserve chairs Ben Bernanke and Paul Volcker appear together for the first time in New York, April 7, 2016. The panel is geared toward millennials and focused on decision-making with international implications.
While Volcker admitted he saw some "overextended" pieces of the financial system, he concurred, saying he does not believe a bubble exists.

Yellen added that the global economy has seen "relatively weak" growth despite positive signs in the U.S. The Fed has taken a cautious approach on raising interest rates this year after hiking its target in December for the first time in nearly a decade. The bank's policy committee now projects two rate hikes this year.

Yellen said she did not consider the December decision a mistake, as indicators at the time showed "substantial" progress toward the Fed's labor market and inflation goals. Moving forward, she noted the Fed would "watch very carefully what is happening in the economy."

"We remain on a reasonable path and a don't think that December was a mistake," she said.

Market crisis
The end of these two trends spells market trouble

THIS is giving policymakers indigestion: Economist

As it decides on how quickly to boost rates, the Fed has dealt with a sagging global economy and U.S. inflation below its target. The Fed's tightening path comes as other central banks around the globe, including those in Europe and Japan, have eased.

The policy committee next meets on April 26 and 27.
Some Fed observers have questioned how the central bank could respond to a possible recession with policy already accommodative. Bernanke noted Thursday that fiscal policy "does have a role to play" on top of monetary policy.

Greenspan added that monetary policy "should not have the whole load" of combating an economic slowdown. However, he cautioned against creating more debt with increased government spending.

Ending 'too big to fail'

Yellen also addressed a recent crusade by Minneapolis Fed President Neel Kashkari, who has floated breaking up large banks to increase financial system stability. She noted that she shared Kashkari's concern about ending firms' "too big to fail" status.

But she said policies like capital and liquidity requirements and stress tests have "greatly enhanced the safety and soundness of the banking system."

"I feel more positive on the progress that we've made," Yellen said.
She said she believes the issue is within Kashkari's purview, noting that the Fed's decentralized structure allows independent views

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« Reply #52 on: April 08, 2016, 08:35:58 AM »

Friday, 08 April 2016 07:29
Fed's Yellen says US still on track for MORE RATE HIKES
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  Fed's Yellen says US still on track for MORE RATE HIKES
NEW YORK - The US economy is on a solid course and still on track to warrant further interest rate hikes, Federal Reserve Chair Janet Yellen said on Thursday (Apr 7).

Speaking at a panel with former chiefs of the US central bank, Yellen said the labour market was "close" to full strength and that inflation was currently held back by temporary factors. - Reuters

Full article:
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« Reply #53 on: April 08, 2016, 08:44:29 AM »

回應(0) 人氣(5) 收藏(0) 2016/04/08 08:08
MoneyDJ新聞 2016-04-08 08:08:35 記者 陳瑞哲 報導





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« Reply #54 on: April 08, 2016, 03:22:33 PM »

回應(0) 人氣(829) 收藏(0) 2016/04/08 09:22
MoneyDJ新聞 2016-04-08 09:22:16 記者 郭妍希 報導
聯準會(Fed)主席葉倫(Janet Yellen,見圖)7日在紐約國際公寓(International House)與Fed歷任主席柏南克(Ben Bernanke)、沃爾克(Paul Volcker)和葛林斯班(Alan Greenspan)展開圓桌會議,從談話內容來看,Fed至今還不敢升息,顯然是受到國際總經颳來逆風的影響,葉倫對美國國內景氣依舊相對樂觀。

葉倫同時指出,她目前正在試圖拉高通膨,美國經濟已步上正軌、絕非泡沫經濟。針對民主黨總統候選人桑德斯(Bernie Sanders)直指華爾街對Fed影響過鉅的批評,葉倫則完全不同意。
Fed暗示升息次數砍半,從四次減為兩次,然而摩根士丹利投資管理(Morgan Stanley Investment Management、大摩)認為,其實兩次都算多,今年FED頂多升息一次,而且可能拖到12月才敢動手。
巴倫(Barronˋs)網站6日報導,大摩固定收益投資組合經理人Jim Caron表示,從FED 3月會議紀錄看來,4月升息幾乎無望,他對此毫不訝異。他說,FED 3月才把升息預期減半,這是一大改變,不大可能腰斬之後,又在4月升息。

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« Reply #55 on: April 08, 2016, 03:35:28 PM »

回應(0) 人氣(199) 收藏(0) 2016/04/08 13:51
MoneyDJ新聞 2016-04-08 13:51:30 記者 陳瑞哲 報導
聯準會(FED)地區分行最近習慣與主席唱反調,葉倫周四說美國經濟沒有泡沫化之虞,但話才說出口就被堪薩斯分行總裁喬琪(Esther George)打槍。




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« Reply #56 on: April 09, 2016, 06:55:04 AM »

Why Janet Yellen Can Never Normalize Interest Rates
Tyler Durden's pictureSubmitted by Tyler Durden on 04/08/2016 17:45 -0400

Bank of Japan Bond China default European Central Bank Insurance Companies Janet Yellen Japan JPMorgan Chase Rate of Change Recession

Submitted by Bill Bonner of Bonner & Partners (annotated by's Pater Tenebrarum),

No Return to Normal

Overall, world stocks have held up well, despite cascading evidence of impending doom.

U.S. corporate profits have been in decline since the second quarter of 2015. Globally, 36 corporate bond issues have defaulted so far this year – up from 25 during the same period of 2015. Economists at JPMorgan Chase put the U.S. economy growth rate for the first quarter at 0.7% – down by over one-third from earlier estimates.


1-pretax corporate earnings

Annual rate of change in quarterly pre-tax profits: nothing to write home about. A  small “profits recession” incidentally preceded the last economic downturn as well – click to enlarge.


And there is $1.7 trillion in junk bonds outstanding – a trillion more than in 2008. Some of these are sure to default in the months ahead. Speculators are already shorting the banks with the biggest piles of these grenades in their vaults.

Over the last few days, we’ve been trying to coax out an insight. It concerns whether Fed chief Janet Yellen really does have investors’ backs. Not that we have any doubt about her intentions.

Her career has been financed and nurtured by credit and the people who provide it. Crony capitalists, corrupt politicians, and Deep State hustlers paid good money for her; she’ll do all she can to avoid letting them down.


2-BKX-SPX ratio

Bank stocks vs. the S&P 500 Index: something isn’t right in financial land – click to enlarge.


But something isn’t working. Not for her. Not for Bank of Japan governor Haruhiko Kuroda. Not for the president of the European Central Bank, Mario Draghi. Not for People’s Bank of China governor Zhou Xiaochuan. Their tricks no longer work.

We’re on record with a bold prediction: The Fed will NEVER normalize interest rates. Readers may wonder how that jives with our deeper insight: Nobody knows anything. And of course, we don’t know whether the Fed will normalize or not. But let us further explain our reasoning; you make up your own mind as to where to place your bet.



They’ve built a big house of cards…and they presumably realize it by now (how can they not?)


The short version of our argument: For the last eight years, the Fed has tried to stimulate the economy with ultra-low interest rates. Business, consumers, and government now almost all depend on credit… and most need ultra-low rates to make ends meet.

Consumers are in better shape, generally, than they were in 2008. But corporations and governments are in worse shape. Raise the cost of funding, and you will push many of them over the edge.

Banks, pension funds, and insurance companies are especially vulnerable. They’re now stocked up with low-yield government bonds. Should interest rates rise, those bonds will go down in price. In other words, raising rates will provoke the very calamity the Fed was trying to avoid: the bankruptcy of the financial sector.


The Triumph of Politics

But wait…how did Bernanke, Yellen, Kuroda, Draghi et al. think they would ever get away with it? How could they believe – even for a minute – that a debt problem could be solved by adding more debt? And yet, they always got away with it before.

After World War II, for example, the feds had a higher debt-to-GDP ratio than they have now. But after the war, the economy boomed, inflation rose… and soon the debt was no problem. Again, at the beginning of President’s Reagan’s first term, economists worried about large government deficits.


3-debt,more debt, GDP and FF rate

The “there’s no coming back from this” chart: total US credit market debt (black line), federal government debt (green line), GDP (red line) and the federal funds rate (light-blue line) – click to enlarge.


The job of colleague David Stockman – director of Reagan’s budget team – was to bring those deficits under control. He failed… a story well told in his book The Triumph of Politics: Why the Reagan Revolution Failed.

Conservative economists thought the U.S. would sink into another slimy pool of deficits and debt. But once again, a spurt of growth (with low deficits) during the Clinton years reduced the debt to a more manageable level. So, why worry?

Because this time, it’s not working. Growth is slowing. Productivity has stalled. As former Goldman boy Gavyn Davies put it in the Financial Times: “The slowdown in labor productivity accounts for most of the massive disappointment in global output growth since just before the 2008 crash.”

Professor Robert Gordon at Northwestern University believes there is more to it than just a cyclical downturn. He maintains that the extraordinary growth of the Industrial Revolution had played itself out by the 1980s. And it can’t be repeated.

We have another hypothesis: Either way, the debt can never, voluntarily, be brought under control. And the Fed can never “normalize” rates

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« Reply #57 on: April 11, 2016, 06:17:22 PM »

Obama Announces Unexpected Meeting With Yellen Following Tomorrow's "Expedited Procedures" Fed Meeting
Tyler Durden's pictureSubmitted by Tyler Durden on 04/10/2016 21:15 -0400

Federal Reserve Global Economy Janet Yellen Joe Biden Reuters White House

One of the more significant, if largely underreported events from last Friday, was the Fed's surprising announcement that it would conduct a closed meeting tomorrow, April 11, at 11:30am "under expedited procedures" during which the Board of Governors will review and determine advance and discount rates charged by the Fed banks.

This is notable because the last time such a meeting took place was on November 21, less then a month before the Fed's historic first rate hike in years.

Moments ago things got even more interesting, when in yet another unexpected announcement, the White House said that both Obama and Joe Biden would meet with Janet Yellen on Monday to discuss the economy and Wall Street reform, the White House said late on Sunday. The meeting is expected to take place some time "in the afternoon."

"In the afternoon, the president will meet with Federal Reserve Chair Janet Yellen to discuss the state of the American and global economy, Wall Street reform, and the long-term economic outlook; the vice president will also attend," the statement said.

According to Reuters, the president and the Fed chair meet regularly to discuss economic issues. Still, one can't help but wonder what will be said in these two back to back meetings, both of which will be closed to the public.

In the meantime, we are confident numerous Fed speakers will explain how the Fed may or may not raise rates in the immediate future, unless it of course, does not, all depending on data which the Fed no longer cares about.

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« Reply #58 on: April 12, 2016, 05:56:11 AM »

White House Issues Following Statement After Meeting Between Obama And Yellen
Tyler Durden's pictureSubmitted by Tyler Durden on 04/11/2016 17:01 -0400

White House

The closed-door meeting between Obama, Biden and Yellen has concluded, and moments ago the White House released the following statement:

"The President and Chair Yellen met this afternoon in the Oval Office as part of an ongoing dialogue on the state of the economy. They discussed both the near and long-term growth outlook, the state of the labor market, inequality, and potential risks to the economy, both in the United States and globally. They also discussed the significant progress that has been made through the continued implementation of Wall Street Reform to strengthen our financial system and protect consumers."
Of course, for the actual transcript of what was said, we will have to rely on some conscientious White House leaker putting it on BitTorrent, but here is our modest attempt at translating what was and what was not said: no market crashes allowed until November.

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« Reply #59 on: April 13, 2016, 07:21:51 AM »

SocGen: "Now We Know Why The Fed Desperately Wants To Avoid A Drop In Equity Markets"
Tyler Durden's pictureSubmitted by Tyler Durden on 04/12/2016 18:15 -0400

Bond Central Banks Corporate America default Equity Markets headlines Investment Grade Monetary Policy Reality SocGen Volatility

With the ECB now unabashedly unleashing a bond bubble in Europe of which it has promised to be a buyer of last resort with the stronly implied hint that European IG companies should issue bonds and buy back shares, and promptly leading to the biggest junk bond issue in history courtesy of Numericable, it will come as no surprise that the world once again has a debt problem.

For the best description of just how bad said problem is we go to SocGen's Andrew Lapthorne, one of last few sane analyzers of actual data, a person who first reveaked the stunning fact that every dollar in incremental debt in the 21st century has gone to fund stock buybacks, and who in a note today asks whether "central bank policies going to bankrupt corporate America?"

His answer is, unless something changes, a resounding yes.

Here are the key excerpts:

Sensationalist headlines such as the one above are there to grab the reader’s attention, but the question is nonetheless a serious one. Aggressive monetary policy in the form of QE and zero or negative interest rates is all about encouraging (forcing?) borrowers to take on more and more debt in an attempt to boost economic activity, effectively mortgaging future growth to compensate for the lack of demand today. These central bank policies are having some serious unintended consequences, particular on mid cap and smaller cap stocks.
Aggressive central bank monetary policies have created artificial demand for corporate debt which we think companies are exploiting by issuing debt they do not actually need. The proceeds of this debt raising are then largely reinvested back into the equity market via M&A or share buybacks in an attempt to boost share prices in the absence of actual demand. The effect on US non-financial balance sheets is now starting to look devastating. We’re not the only ones to be worried. The Office of Financial Research (OFR), a body whose function is to assess financial stability for the US Treasury, highlights corporate debt issuance as their primary threat to financial stability going forward.
In our assessment, credit risk in the U.S. nonfinancial business sector is elevated and rising, and by more than depicted in the Financial Stability Monitor. The evidence is broad. Credit growth to the sector has been rapid for years, pushing the ratio of nonfinancial business debt to GDP to a historically high level. Firm leverage is also at elevated levels. Creditor protections remain weak in debt contracts below investment grade. These factors are consistent with the late stage of the credit cycle, which typically precedes a rise in default rates.
The reality is US corporates appear to be spending way too much (over 35% more than their gross operating cash flow, the biggest deficit in over 20 years of data) and are using debt issuance to make up the difference. US corporates will have to borrow over 2.5% of their market capitalisation (over $400bn each year) to, somewhat ironically, buy back their own stock.

This cash flow deficit then needs to be financed, hence the continuing need to raise more and more debt. Current spending implies US non-financials will have to raise another $400bn of debt, a large proportion of which would then be reinvested back into the equity market via share repurchases. Some consider this to be shareholder return, while others (ourselves included) see it as simply remortgaging shareholder equity in an attempt to boost short-term share price performance. This in our view is short-term irrationality.
No matter where you look or how you measure it, leverage is elevated and continues to rise to unusually high levels given where we are in the cycle, with the most worrying rise in small cap stocks’ debt levels. Looking at interest cover is not particularly reassuring either, with the weighted interest coverage ratio approaching the recent low of 2009 when EBIT was depressed and not that far off the 1998/2003 levels when corporate bond yields were significantly higher.
The catalyst for a balance sheet crisis is rarely the affordability of interest rates, so a 25bp rise in Fed rates is neither here nor there. Credit market risk is about assessing the likelihood of getting your money back. As such asset prices (i.e. equity markets) and asset price risk (i.e. equity volatility) are far bigger concerns. So all you need for a balance sheet crisis is declining equity markets, a phenomenon the Fed appears desperate to avoid. Now we know why (see chart below).

Well that, and another reason: as of this moment one can measure the daily credibility of central banks by whether stocks closed higher or lower; too low and everyone starts talking about how CBs no longer have credibility and how they would rather Yellen et al would stop micromanaging everything... and then everyone quiets down when stocks surge back to all time highs. Alas, this means that the markets have not only stopped being a discounting mechanism (or rather they only discount what central banks will do in the immediate future), but have also stopped reflecting the underlying economy a long time ago, something will remains lost on all of the "smartest people in the room."

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« Reply #60 on: April 18, 2016, 04:39:19 PM »

2016年04月18日 06:17 AM
英国《金融时报》旗下宏观研究机构Medley Global Advisors总裁 丹•博格莱










或许不行。如果说这世上还有一家央行,强大到足以说服各个市场顺应它的思路,而不是被这些市场牵着走,那一定就是美联储。虽然在珍妮特•耶伦(Janet Yellen)的领导下,美联储的政策制定者们依然态度谨慎,可一旦数据开始变得强劲起来,他们的谨慎也将随之消失。具体来说,美联储认为美国劳动力市场已基本恢复,金融条件在今年初的可怕动荡后已再次缓解,而且国际风险(如中国经济崩溃或油价暴跌)似乎也降低了。


但即使到了那时,美联储对加息依然会谨慎。事实上,联邦公开市场委员会(Federal Open Market Committee)中的鸽派愿意让通胀自由上行,直到其略高于预期目标,他们预计这将提振经济增长和就业。但在谨慎收紧政策与今年加息2次之间并无矛盾;英国《金融时报》旗下宏观研究机构Medley Global Advisors目前预计,加息时间将分别是今年6月和12月。


丹•博格莱(Dan Bogler)是英国《金融时报》旗下宏观研究机构Medley Global Advisors总裁


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« Reply #61 on: April 19, 2016, 06:03:32 AM »

Greenspan Admits The Fed's Plan Was Always To Push Stocks Higher
Tyler Durden's pictureSubmitted by Tyler Durden on 04/18/2016 14:20 -0400

Alan Greenspan Equity Markets Federal Reserve Kyle Bass Kyle Bass Monetary Policy Price/Earnings Ratio Quantitative Easing

Former Federal Reserve Chairman Alan Greenspan admitted in an interview with Sara Eisen that quantitative easing did what it was supposed to do, which was to inflate stock prices and drive multiple expansion.

He was confused as to why things such as corporate earnings, capital spending, and productivity have declined given how much QE was pumped into the system. The answer to the riddle of course, is that QE was never intended to help fix anything fundamentally, it was as Kyle Bass said recently, simply a mechanism to transfer wealth and make the rich richer.

"Monetary policy has done everything it can, unless you want to put additional QEs on and QEs on, they're not helping that much.
What ultimately determines whether or not you're getting an effect from the QEs are what has happened to the price/earnings ratio, and that obviously has done what you'd expect it to do.
You bring long-term rates down, and the price/earnings ratios in the equity markets go up, which is exactly what they planned to do and it's happened that way."
All of this is precisely what we've been saying all along, which is that QE has always been about one thing, and that is to take wealth from many (savers), and transfer it to a select few (asset owners)

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« Reply #62 on: April 20, 2016, 06:00:03 AM »

Boston Fed Says "Markets Are Wrong," Rates Are Going Higher, Sooner
Tyler Durden's pictureSubmitted by Tyler Durden on 04/18/2016 22:25 -0400

Alan Greenspan Bond Consumer Confidence Federal Reserve Federal Reserve Bank Federal Reserve Bank Of Boston Monetary Policy None Reality Recession

Gold and bond prices dropped and stocks popped as yet another open-mouth operation went underway this evening from none other than Boston Fed president Eric Rosengren. Ahead of next week's FOMC meeting, and just days after another Fed president said no April hike, Rosengren spewed firth that "I don't think financial markets have it right." Of course, what this preacher means is that while stock markets are perfectly efficient (and correct), bonds and rate futures areclearly inefficient and "investor outlooks for Fed rate hikes are too pessimistic," because "the US economy is fundamentally sound."



Of course, after a day of oil/stock rebounds on dismal disappointment in Doha, this makes perfect sense...

Federal Reserve Bank of Boston President Eric Rosengren issued a stark warning to markets Monday, telling traders and investors they are seriously underestimating how many rate rises the U.S. central bank is likely to deliver over the next few years.
"I don't think the financial markets have it right," Mr. Rosengren said in a speech given in New Britain, Conn., at Central Connecticut State University.
"While I believe that gradual federal-funds rate increases are absolutely appropriate, I do not see that the risks are so elevated, nor the outlook so pessimistic, as to justify the exceptionally shallow interest rate path currently reflected in financial futures markets," he said.
yeah you are probably right - what is wrong with this US economy?


Ignore this though he say - it's wrong too!!

As WSJ notes, however, Rosengren, currently an FOMC voter, has long skewed toward the dovish end of the Fed scale.

While he's been on board with the Fed raising rates he's definitely banged the drum for moving slowly. So his speech this evening is notable because he puts markets on warning for holding what he views as the wrong outlook on rates.
He says nothing about the April FOMC, but that said, if Mr. Rosengren thinks markets are underestimating what the Fed will do, investors and traders might want to listen.
There was some reaction in markets...


So - interest-rate markets are wrong; macro data is mostly wrong (apart from the jobs data); and The Fed is right?

As we showeed in our discussion of the Fed’s forecasts, these predictions have continued to fall short of reality.

“Besides being absolutely the worst economic forecasters on the planet, the Fed’s real problem is contained within the table and chart below. Despite the rhetoric of stronger employment and economic growth – plunging imports and exports, falling corporate profits, collapsing manufacturing and falling wages all suggest the economy is in no shape to withstand tighter monetary policy at this juncture.”

“Of course, if the Fed openly suggested a ‘recession’ could well be in the cards, the markets would sell off sharply, consumer confidence would drop and a recession would be pulled forward to the present. This is why “what the Fed says” is much less important than what they do.”
And here is Alan Greenspan meeting with Dixie Noonan et al on March 31, 2010:

This is a reason why the Board is getting an unfair rap on this stuff. We didn’t forecast better than anyone else; we regulated banks that got in trouble like anyone else. Could we have done better? Yes, if we could forecast better. But we can’t. This is why I’m very uncomfortable with the idea of a systemic regulator, because they can’t forecast better.
This comes from the person in charge of the most powerful central bank in the world; a world which now is reliant exclusively on central bankers for its day to day pretend existence

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« Reply #63 on: April 20, 2016, 06:02:05 PM »

As Fed goes silent, so too go chances of April rate hike

By Greg Robb
Published: Apr 19, 2016 9:06 a.m. ET

Support among hawkish Fed officials for move next week has faded
AFP/Getty Images
The facade of the U.S. Federal Reserve, which is expected to hold interest rates next week.
WASHINGTON (MarketWatch) — The Federal Reserve begins its media blackout Tuesday, as always happens one week before it’s interest rate policy meeting.

Based on everything that’s been said over the past six weeks, the Fed is widely expected to hold rates steady and try not to rock the boat to upset the relative calm in financial markets.

“The chance of a Fed rate hike appear to be nil,” said Sam Bullard, senior economist at Wells Fargo Securities.

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« Reply #64 on: April 22, 2016, 06:02:33 AM »

Rising commodity prices could spell trouble for Fed: Boockvar
Tom DiChristopher   | @tdichristopher
10 Hours Ago
COMMENTSJoin the Discussion

The five-year commodity bear market appears to be coming to a close, and that could spell trouble for the Federal Reserve, Peter Boockvar, chief market analyst at the Lindsey Group, said Thursday.

The Dow Jones commodity index had fallen roughly 50 percent since 2011, but the asset class has recently shown signs of turning a corner. It has risen more than 13 percent this year.

A worker grabs a nozzle at a PTT gas station in Bangkok, Thailand, January 5, 2016.
Cramer: Commodity rally could head higher
"I think this bottom is for real. I think that it's not demand driven, it's supply driven," Boockvar told CNBC's "Squawk Box."

He said that puts the Federal Reserve in an "interesting situation" because rising commodity prices combined with services sector inflation running at about 3 percent will likely send headline inflation to the central bank's 2 percent target.

That could force the Fed to raise interest rates sooner than policymakers anticipated.

It would be one thing if the commodity bounce were demand driven, indicating stronger global growth, Boockvar said. But since the rise is being fueled by a reduction in supply, the Fed could be grappling with higher inflation and middling economic growth, he said

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« Reply #65 on: April 24, 2016, 02:28:05 PM »


With US economy in soft spot, Fed likely to keep policy on hold
Published: April 24, 2016 12:39 PM GMT+8


The front of the United States Federal Reserve Board building is shown in Washington. — Reuters pic
The front of the United States Federal Reserve Board building is shown in Washington. — Reuters pic
WASHINGTON, April 24 ― Persistent worries about the global economy and the possibility of Brexit ― Britain's pullout from the European Union ― will probably keep the Federal Reserve on hold this week as it reviews interest rates.

The policy-setting Federal Open Market Committee will also be buying time to be sure the US economy picks up from a modest first-quarter slowdown and more unexpected weakness in inflation, analysts say.

Minutes from the FOMC's March meeting and speeches by Fed officials show the group is divided between those who think another increase in the benchmark federal funds rate after December's is appropriate now, and those who want to wait.

But analysts say the heavier hand of dovish Fed Chair Janet Yellen together with Brexit, the still-simmering Greek crisis and other worries about the international economy should keep the balance against an increase.

The FOMC meets on Tuesday and Wednesday, its third meeting of a year that began with expectations of a possible four rate increases to take the Fed funds rate to 1.25-1.50 per cent by year's end.

But after the deep turbulence in international financial markets at the beginning of the year, and then some weakness in US consumer spending and business investment clouded the growth picture, expectations were lowered to just one or two quarter-point increases this year.

“Following an unexpectedly dovish turn by Chair Yellen last month, it seems to be a done deal that the Fed will leave its interest rate unchanged,” economist Harm Bandholz of Unicredit said.

Paul Ashworth of Capital Economics agreed.

“The Fed is very unlikely to raise interest rates at the upcoming FOMC meeting,” he said. “Nevertheless, we expect the Fed to leave the door open to a rate hike at the next meeting in mid-June.”

Slower growth outlook

The meeting comes amid a debate inside and outside the Fed about whether the US economy is insulated enough to withstand more volatility in global financial markets and continued slow growth around the world.

The International Monetary Fund cut its outlooks for world and US growth last week, citing significant outstanding threats, including regional conflicts and Brexit.

Economists are also cutting their expectations for US first-quarter growth, with Unicredit penciling in a very slow 0.5 per cent annual pace.

Against that, the Fed has to weigh positive signs such as continued strong hiring that is boosting household incomes, and the dollar's recent fall, which will buoy exports.

The minutes to the Fed's last meeting show some advocating an earlier rate hike to ensure the Fed does not miss the boat when inflation picks up.

But other members of the committee, which Yellen leads, were very skittish.

Many in the group felt that “a cautious approach to raising rates would be prudent or noted their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate.”

Then there is Brexit, which could create deep disruptions in trade and investment relationships beyond the European Union.

With Britain set to hold a referendum on the issue only on June 23 ― a week after the Fed's June meeting ― Stephen Oliner of the American Enterprise Institute said the risk it poses should keep the Fed on hold even then.

“I don't see how they would feel confident enough that they could signal June is likely, given that the outcome of the Brexit vote won't be known until after the June FOMC meeting,” he said. ― AFP

- See more at:

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« Reply #66 on: April 25, 2016, 05:55:38 PM »

回應(0) 人氣(913) 收藏(0) 2016/04/25 14:06
MoneyDJ新聞 2016-04-25 14:06:47 記者 陳瑞哲 報導
老外常說別胡亂許願(be careful of what you wish for),因為如果不小心許錯願卻成真,屆時恐後悔莫及。聯準會(FED)朝夕目盼通膨回到2%,但通膨若真的來了,那低利率政策還能再維持多久,未來若被迫加速升息,恐引發引發金融市場更大動盪。





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« Reply #67 on: April 26, 2016, 06:11:04 PM »

回應(0) 人氣(579) 收藏(0) 2016/04/26 15:52
MoneyDJ新聞 2016-04-26 15:52:29 記者 賴宏昌 報導
時代雜誌網路版4月13日報導,聯準會主席葉倫(Janet Yellen)在接受專訪時表示,如果她現在得在金融泡沫疑慮跟美國中西部就業機會之間做出抉擇、她會選擇後者。美國總統歐巴馬(Barack Obama)、葉倫甫於4月11日在橢圓形辦公室進行罕見的一對一閉門會議。葉倫近日持續拉高「鴿」聲可能與歐巴馬會面有關。
日本經濟新聞4月26日報導,根據Haynes & Boone在4月15日公布的調查,2015年初迄今美國與加拿大石油、天然氣企業已有63家宣告破產、總負債金額高達225億美元,今年迄今就佔了21家。中型頁岩油鑽探公司Goodrich Petroleum因無力償還5億美元債務、於4月中旬申請破產保護。Energy XXI也因為無力償還利息而倒閉。受多家頁岩油廠商倒閉影響、美國原油產量現已降至2014年10月以來最低水準。

Oppenheimer分析師Fadel Gheit預估,即便每桶原油價格回升至50-60美元,半數頁岩油廠商仍無力繼續存活下去。美國能源情報署(EIA)統計顯示,截至4月15日為止當週美元原油日產量報895萬桶、連續第2週低於900萬桶大關,與2015年6月的高峰值(961萬桶)相比下滑了7%。
worldoil.com報導,根據德勤(Deloitte)2月發表的報告,全球175家(占比逼近35%)上市勘探和生產(E&P)企業今年將面臨高度的破產風險,這些公司的合計負債金額超過1,500億美元。德勤副董事長John England指出,今年E&P企業破產家數恐將超越大衰退時期水準,因為2015年提供緩衝的有利因素(發行企業債、申請銀行貸款、發行增資股、透過衍生性商品進行避險)正在快速消退中。
知名人力資源機構Challenger, Gray & Christmas統計顯示,2016年第1季美國能源業宣布裁員人數達52,901人、較去年同期增加39.9%。
investors.com報導,全美獨立企業聯盟(NFIB)4月12日公布,2016年3月小型企業信心指數自2月的92.9跌至92.6、創下兩年新低紀錄,低於42年平均值(98)。NFIB指出,小型企業信心指數過去15個月累計下跌7.7點、暗示美國經濟未來可能步入衰退。NFIB首席經濟學家William Dunkelberg指出,4月數據將決定美國是否會亮出經濟衰退警訊

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« Reply #68 on: April 27, 2016, 08:31:51 AM »

Expect stocks to sell off if the Fed talks the dollar back into rally mode

By Joseph Adinolfi
Published: Apr 26, 2016 12:22 p.m. ET

Investors are wondering how, or if, the Fed will acknowledge the recent improvement in global market conditions
AFP/Getty Images
If the Fed acknowledges global market improvement since its last meeting, it could reignite the dollar rally.
Circumstances in both foreign and domestic markets have shifted remarkably since the members of the Federal Reserve’s interest-rate setting committee last met in March.

Now, investors are wondering: Will the Federal Reserve’s outlook change, too? Which, if any, market developments could central bankers choose to address as they wrap up a two-day meeting Wednesday?

And ultimately, what impact would this have for the U.S. dollar and, through it, on financial markets more broadly?


Both market strategists and corporate executives have acknowledged the dollar’s role in soothing turbulent financial markets and boosting corporate earnings since the beginning of the year.

Recent dollar weakness, which followed a massive run-up for the buck in the second half of 2014 and opening months of 2015, has been said to have boosted oil prices CLM6, +1.14% The dollar traded effectively sideways for the remainder of 2015, before turning markedly lower in the first quarter of 2016. That weakness has persisted since. That dollar trend provided much-needed relief to energy shares and stoked a recovery in U.S. stock indexes SPX, +0.19% . Finally, after years of stagnation, inflation is stirring, and prices have started to rise at a rate approaching the central bank’s annual target of just below 2%.

U.S. Dollar Index (DXY)
11 Jan
25 Jan
8 Feb
22 Feb
7 Mar
21 Mar
4 Apr
18 Apr
The ICE U.S. Dollar index DXY, -0.02% a measure of the buck’s strength against a basket of six rivals, is down more than 4% so far this year; it was trading near 94.4350 Tuesday.

It’s likely that the Fed acknowledges these changes in its policy statement, strategists have reasoned.

And if the Fed adjusts its forward guidance to reflect subsiding volatility in global financial markets — one of the primary reasons the central bank lowered its expectations for the number of rate hikes this year — then surely investors could interpret this as a sign the central bank sees fewer obstacles to raising rates.

Only then can a dollar rally, on hold since late last year, begin again.

“We look to broad [dollar] strength into and through Wednesday’s [Fed meeting], as we note the potential for an acknowledgment of the improvement in many of the factors...that fostered the Fed’s cautious tone through the January and March meetings,” said Eric Theoret, a currency strategist at Scotiabank, said in a research note Tuesday.

In theory, rising interest rates would support the dollar by increasing the return on investments denominated in dollars, making it more attractive to investors. But a stronger buck would also undo a lot of the benefits to corporate earnings, likely weighing on stocks.

DuPont CFO Nicholas Fanandakis said during the company’s quarterly earnings call that the dollar’s decline against most currencies since the beginning of the year will offset the currency impact on earnings by 10 cents per share. The company now anticipates the negative currency impact for 2016 to drop to 20 cents per share from a forecast of 30 cents set in January.

Read: DuPont lifts 2016 outlook as earnings beat views

The company’s shares DD, +2.40%  were up 2.2% at $67.44 at one point Tuesday, making it the leading stock on the Dow Jones Industrial Average DJIA, +0.07%

Herein lies the challenge for the Fed: The central bank must be extremely delicate about how it communicates with the market for fear of driving the dollar higher and undoing the gains in equities and oil seen since mid-February.

Also, it’s likely that the central bank would hold off on making any substantial changes to its policy statement because the improvement in U.S. economic conditions hasn’t been strong enough to warrant a June hike, said Joshua Shapiro, chief U.S. economist at MFR Inc.

While MFR expects the Fed to hike in June, it’s more likely that the central bank doesn’t want to over-promise when it releases its statement at 2 p.m. Eastern on Wednesday.

“Our view is that they would want to keep their options wide open for June. Why would they want to paint themselves into a corner?” Shapiro said. “Things have calmed down, but that can change in a heartbeat.”

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« Reply #69 on: April 27, 2016, 08:42:44 AM »

Fed will do a cautious dance to avoid volatility
Patti Domm   | @pattidomm
1 Hour Ago
COMMENTSJoin the Discussion
The Fed is expected to do a cautious dance when it releases its statement Wednesday, as it leaves the door open for a rate hike in June but is not signaling one.

After two days of meetings, the Fed will release a 2 p.m. statement Wednesday. The statement is not expected to be much changed from its last one, but Fed watchers say the nuances will be important. There is no press conference where Fed chair Janet Yellen can provide further clarification, so markets will have only the statement to respond to.

The Fed is expected to be dovish in its statement, but the bond market clearly has been fearing it will be a bit more hawkish, and yields have been rising. Market expectations are for the next rate hike to come early next year, but the Fed has said it expects two rate hikes before then, so there is tension around any statement it would make.

Read MoreKensho Stats: Buy this if Fed hawks fly this week

"I don't think they're going to tip their hand on the policy section of it. I think the hawkishness might come in their description of the economy, because credit spreads have come back and are no longer a worry. The stock market is no longer down 10 percent on the year. Even the G-20 was less concerned about the economic outlook for the world," said Chris Rupkey, chief financial economist at MUFG Union Bank.

But the U.S. economic data has been spotty, with more than a few misses recently. Durable goods was weaker than expected Tuesday, and first quarter GDP, expected Thursday, is predicted to be just barely positive.

Fed officials have also been sending mixed messages about rate hikes. For instance, Boston Fed President Eric Rosengren, viewed as a dove, has said the markets have it wrong and are not pricing in enough rate hikes.

"The problem is you've got disagreement. The gap has widened," said Diane Swonk, CEO of DS Economics. "You've got dissents. When you have dissents, you have volatility." Cleveland Federal Reserve President Loretta Mester is expected to join Kansas City Fed President Esther George in dissenting Wednesday, as they object to the Fed's lack of rate hikes.

"I don't think they can put the balance of risk back in, because they can't agree what the balance of risks are," said Swonk. "It just means continued uncertainty, continued uncertainty for the market."

Michael Arone, chief investment strategist at State Street Global Advisors, also said the Fed is unlikely to suggest that risks are balanced.

Read MoreHoward Marks on avoiding the market's biggest trap

"If they tell you it's nearly balancing, that'll be a signal that June is on the table," said Arone, adding he does not expect to see that.

Arone said the Fed will want to leave options open. "I don't think this Fed, and Yellen in particular, likes to paint themselves into a corner," said Arone. "The statement will acknowledge that growth in the economy is modest. They haven't seen the flow through to inflation and they'll remain data dependent going forward."

He said he will be watching to see if Yellen's view is dominant in the statement. "My view is what Yellen did with her Economic Club of New York speech (March 29), she was saying: 'I'm the chairperson. This is my view. We're going to go slow and gradual.' At the time, other Fed officials were talking about how April was still on the table," Arone said. "I think what markets are going to be looking to see is if that remains the message or if we're back in this kind of limbo."

Read MoreThis will be the unexpected driver of the market's next move: Technician

It will also be important to see if the Fed gives any nod to stability in international markets now that China has calmed some of the fears around its economy.

Besides the Fed, there is the trade deficit data at 8:30 a.m. EDT and pending home sales at 10 a.m. EDT. There is a 10:30 a.m. EDT government inventory data on oil and gasoline, and the Treasury auctions seven-year notes at 1 p.m. auction.

Earnings before the bell include Boeing, Comcast, GlaxoSmithKline, Mondelez, United Technologies, Anthem, Northrop Grumman, Dr Pepper Snapple, Nasdaq OMX, Nintendo, State Street, Tegna, Garmin, Six Flags and General Dynamics. After the bell, reports are expected from Facebook, PayPal, Marriott, SanDisk, Cheesecake Factory, La Quinta, Rent-A-Center, First Solar, Texas Instruments and Vertex Pharmaceuticals

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« Reply #70 on: April 28, 2016, 07:04:05 AM »

Fed holds on rates, warns economy has slowed
Jeff Cox   | @JeffCoxCNBCcom
4 Hours Ago
COMMENTSJoin the Discussion

Amid a moribund economy and reduced levels of consumer spending, the Fed on Wednesday again opted not to raise interest rates.

"Economic activity appears to have slowed," the Federal Open Market Committee said in a statement released after its two-day meeting this week. "Growth in household spending has moderated, although households' real income has risen at a solid rate and consumer sentiment remains high."

The statement highlighted the many conflicting signs in the U.S. economy – consistent job growth and an improving housing market against slowdowns in business investment and exports. Indeed, the Atlanta Fed has estimated that economic growth slowed to just 0.6 percent in the first quarter of 2016, a condition reflected in the Fed's lukewarm assessment of conditions.

When should the Fed raise rates again?

In June. The market is ready.
In late 2016.
Not until 2017.
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The statement struck a decidedly dovish tone, and only one FOMC member, Esther George of Kansas City, dissented. George has been a voice for the hawkish element at the Fed that wants to see the U.S. central bank get back on the road to normalization. George advocated for a quarter-point hike, which would take the current range to 0.5 percent to 0.75 percent.

Prominently missing from the statement was a "balance of risks" assessment, a mainstay of Fed communiques in which the Fed described how conditions were shaping up compared to its expectations. Fed watchers have taken the absence of the language from the past two statements as indications that FOMC officials remain concerned about growth both domestically and internationally.

"That tells me that June is effectively off the table," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. "They did not do enough, they have to put that statement back in for them to hike rates."

Janet Yellen
Here's what changed in the new Fed statement
NYSE Traders
Market bets for a June rate hike drop slightly after Fed

Inflation has been elusive for the Fed despite its easy policy path. The central bank kept its rate target near zero for eight years, yet failed to generate inflation above its 2 percent target. The statement reiterated the official stance that inflation will rise toward 2 percent "over the medium term" but is being held back by "the transitory effects of declines in energy and import prices."

Financial markets reacted positively to the statement, with stocks notching slight gains from their position before the release.
"They're responding to market conditions," LaVorgna said of the Fed. "It's (making) it harder for them to take rates to where they should be. The rate should be higher but the Fed is having a hard time getting it where most economists say they already should be."

To be sure, Wall Street wasn't totally taking June off the table for a hike. FOMC official stress data dependence, and if inflation should start to build that would change the equation.

"I saw a couple of points on either side," said Carl Tannenbaum, chief economist at Northern Trust. "The removal of the passive identifying global risks to the outlook might be viewed somewhat less dovishly. It sound like the committee was marginally more comfortable with international risks at this meeting."

The committee cut its assessment of household spending, indicating it "has moderated" after describing it as "increasing at a moderate rate" following the March meeting. The March statement also had noted that inflation "has picked up in recent months," but April's assessment was that it "continues to run below the committee's 2 percent long-run objective."
In addition, the statement added language indicating that the FOMC "continues to closely monitor … global economic and financial developments." That was a slight tweak from April, in which the committee said the international headwinds "continue to pose risks."

The Fed hiked its target rate a quarter point in December, the first such move in more than nine years. At the time, FOMC members, through the "dot plot" of future expectations, had indicated four hikes were likely this year. At their last meeting, though, that same plot suggested only two hikes this year.

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« Reply #71 on: April 28, 2016, 08:36:23 AM »

FOMC Preview: The Fed Is "Scared To Death" & "The Knock-On Effects Could Be Spectacular"
Tyler Durden's pictureSubmitted by Tyler Durden on 04/27/2016 13:50 -0400

Australia Bond Central Banks China CPI Federal Reserve Global Economy Japan Monetary Policy Monetization Reality

Federal Reserve officials are virtually certain to hold interest rates steady when their meeting ends today but they could try to send a message to markets and outside observers about what likely comes next. With no press conference scheduled after this week’s meeting and no new economic forecasts to be released, all the attention will be focused on their words and the market is more aware than ever that the Fed doesn’t act in a vacuum. As Bloomberg's Richard Breslow notes, The Fed is hopeful (that their always-wrong forecasts come true this time) but they're also scared to death on the consequences.

Bloomberg's Mark Cudmore notes that while Fed monetary policy may not change today, any shift in wording from last month’s statement may have massive consequences.

The recent divergence of U.S. rates and the U.S. dollar implies the future path for global assets is increasingly binary.
U.S. financial conditions are now easier than they were at the time of the December rate hike and challenging the two- year trend of tightening. Any dovish signal today would provide yet another significant reflationary impulse to global asset prices
Emerging market assets have paused recently and may be the biggest beneficiaries of such an outcome
On the flip-side, if the statement (there’s no press conference scheduled today, so this is the only insight investors will be getting) indicates a summer rate rise is likely, the Bloomberg Dollar Index will smash the three- month downtrend and lead to a significant re-tightening of financial conditions.

The knock-on effects could be spectacular. Speculative positioning is now net short the dollar for the first time since July 2014, according to the most recent CFTC report. The Bloomberg Commodity Index is up 9% in the last three weeks alone

The market is more aware than ever that the Fed doesn’t act in a vacuum.
There’s an argument that increased easing from the BOJ and ECB prevents tightening in the U.S. because excessive policy divergence will make the dollar too strong
Alternatively, as other central banks provide more stimulus to the global economy, the impact of any Fed tightening outside the U.S. might be mitigated to some extent
Perhaps there’s a third path? A Fed statement so dovish that it provides an inflationary boost strong enough to force the central bank into a summer rate hike
Deutsch Bank agrees that, with no press conference, all the focus will be on the tone of the associated statement.

The Fed will want to leave the door open for a June hike but it's hard to imagine that they'll dramatically change market pricing for it.
The futures contracts have nudged up to pricing a 22% probability of a June hike from as low as 14% mid-way through this month. How much this changes will likely hinge on what extent the Fed continues to acknowledge concerns about global growth and risks abroad. US data has been mixed of late. After getting back close to neutral at the start of April, economic surprise indices have trended steadily lower into negative territory as the month has passed.
On the positive side the weaker US Dollar should give the Fed some confidence. Since the March Fed meeting, the Dollar index has weakened just over 2%. That’s partly helped to support a near $8/bbl gain for WTI and 4% rally for the S&P 500 to YTD highs. We think much of the rebound in markets since early February has been due to the Fed's about turn and re-found dovishness.
This leaves them trapped in our opinion.
So, as Bloomberg's Richard Breslow writes, it’s best to just play it straight...

The Fed is hopeful. They’re also scared to death. The track record of official forecasts has been, shall we say, less than stellar, making “looking through data” a questionable strategy. And communication policy is still very much a work in progress.
An attempt at nuance could very well end up with the markets misinterpreting the intended message. And it won’t be helpful to get another set of speeches decrying that traders got it wrong
The numbers don’t argue for a hawkish statement. They also don’t worry over a rate volte face. They do suggest that the Fed should sit this statement out. Are all meetings live? Yes. It’s just another meaningless phrase
Employment growth has been strong. Not so much wages. Inflation remains below target. GDP and PCE deflator Friday are both expected to be sobering events, after a string of weak data
It’d be a hard sell to tell the country that the numbers are mostly rubbish but we need to get that jobs growth under control
A lot has been made of the recent “back-up” in Treasury yields. To where? Exactly the level they closed on the day of the very dovish March meeting.

It’s not a coincidence that a number of serious bond investors are initiating new longs here
I know they wish they could hike away. I get the frustration with the world being too much with us. But that’s reality
Japan’s in such a mess that analysts are seriously discussing what debt monetization would mean. China’s numbers have been unquestionably better but not without continued stimulus, which is proving to be necessary but not sufficient. After today’s negative CPI, Australia is firmly a rate cut candidate
It’s only weeks since Chair Yellen was incontrovertibly dovish. Equity bubbles can change that fast, but the global economy can’t

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« Reply #72 on: April 29, 2016, 06:05:54 AM »

The Fed finds another mandate, and it's got Wall Street fuming
Jeff Cox   | @JeffCoxCNBCcom
3 Hours Ago
COMMENTSJoin the Discussion

In its quest to find just the right time to raise interest rates, the Federal Reserve seems to have discovered a third mandate: creating a perfect world.

Recent post-meeting statements from the Federal Open Market Committee show that the U.S. central bank has gone well beyond its congressional dual mandate for price stability and full employment. Instead, the Fed now sees global growth as a principal condition for when it will enact another rate hike.

The April statement saw what appeared to be a modest tweak from March, going from an assertion that global issues "continue to pose risks" to the Fed continuing "to closely monitor ... global economic and financial developments."

For some on Wall Street it was a sign that a June rate hike is on the table as global concerns dissipate, while for others it either didn't mean a whole lot or wouldn't be enough to signal that the Fed will make its first hike since December. Along with the vote to raise rates a quarter point, Fed officials then indicated a path — since halved— toward four increases in 2016.

"Bottom line, I'm even more confused as to what factors are influencing them. If the sentence ... on international developments was the reason why they didn't hike in March, what is the excuse this time?" Peter Boockvar, chief market analyst at The Lindsey Group, wrote after the meeting. "All I can say again is that the Fed has and continues to wing it and for all the talk about being data dependent, they've completely neutered the concept because we no longer know what data they are depending on."

Janet Yellen
GDP stumble will keep Fed guessing
The verbal linguistics over the weighting of global versus domestic events in the Fed's decision-making sparked grumbles that echoed across Wall Street.

"The FOMC's apparent whimsical citing of global and financial developments as important policy influences makes monetary policy more uncertain. There is little doubt financial conditions have improved along with modest improvements in the global outlook since the March FOMC meeting," Citigroup economist William Lee told clients. "Instead of reassuring markets, the FOMC's arbitrary and ad-hoc use of global influences to justify policy timing raises the uncertainty of monetary policy."
There was great debate over what it all meant: Lee doubted the Fed would find impetus to hike rates before September, but others disagreed.

As far as trading went, Fed watchers modestly upped the odds for a more aggressive rate path. Still, chances for a June hike are just 19 percent, according to the CME's FedWatch tool, with the first month with a better than 50 percent probability not until September, at 52 percent.

Still, traders are putting the September funds rate at 0.49 percent, just 12 basis points, or 0.12 percentage point, ahead of the current level. A full quarter-point rate hike isn't priced in until February 2017, with an expected funds rate of 0.63 percent.

Even with the Fed's reduced expectations for rate increases, there remains a communication gap between the central bank and the market.

Mohamed El-Erian
Mohamed El-Erian: Whatever Bank of Japan does, it gets wrong
"The Fed has put themselves in this unenviable position of having to answer every little wiggle in the market," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said in a post-meeting interview. "The Fed has now become accountable and (asked to) answer things which are unanswerable."

For the road ahead, the Fed will get to pick its poison between a rocky global landscape that has become increasingly inhospitable to central bank actions (as in Thursday's Bank of Japan foul-up) and a weak domestic climate, where GDP growth in the first quarter was a measly 0.5 percent.

There are those on Wall Street who are bemoaning the notion that the Fed is letting global conditions figure into its decision-making, but the de facto third mandate remains.

There was even discussion from several economists that June's "Brexit" possibility (Britain leaving the European Union) will delay a hike at the next FOMC meeting, which happens days before the vote.

"Considering the Fed's heightened sensitivity to global financial and economic developments, the Fed could be forced to delay raising rates until there is some clarity on the referendum. Markets are already jittery, as U.K. credit default swaps have steadily risen this year," Ryan Sweet, director of real-time economics at Moody's Analytics, said in a note. "The Fed will have to boost market expectations if it is to move in June."

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« Reply #73 on: May 01, 2016, 06:11:18 AM »

The Cult Of Central Banking Is Dead In The Water
Tyler Durden's pictureSubmitted by Tyler Durden on 04/30/2016 13:22 -0400

BLS Central Banks CPI Fannie Mae fixed Fractional Reserve Banking Freddie Mac Main Street Monetary Policy NADA None Output Gap Quantitative Easing

Submitted by David Stockman via Contra Corner blog,

The Fed has been sitting on the funds rate like some monetary mother hen since December 2008. Once it punts again at the June meeting owing to Brexit worries it will have effectively pegged money market rates at the zero bound for 90 straight months.

There has never been a time in financial history when anything close to this happened, including the 1930s. Nor was interest-free money for eight years running ever even imagined in the entire history of monetary thought.

So where’s the fire? What monumental emergency justifies this resort to radical monetary intrusion and repression?

Alas, there is none. And that’s as in nichts, nada, nope, nothing!

There is a structural growth problem, of course. But it has absolutely nothing to do with monetary policy; and it can’t be fixed with cheap money and more debt, anyway.

By contrast, there is no inflation deficiency—–even by the Fed’s preferred measure. Indeed, the very idea of a central bank pumping furiously to generate more inflation comes straight from the archives of crank economics.

The following two graphs dramatize the cargo cult essence of today’s Keynesian central banking regime. Since the year 2000 when monetary repression began in earnest, the balance sheet of the Fed has risen by 800%, while the amount of labor hours used in the US economy has increased by 2%.

At a ratio of 400:1 you can’t even try to argue the counterfactual. That is, there is no amount of money printing that could have ameliorated the “no growth” economy symbolized by flat-lining labor hours.


Owing to the recency bias that dominates mainstream news and commentary, the massive expansion of the Fed’s balance sheet depicted above goes unnoted and unremarked, as if it were always part of the financial landscape. In fact, however, it is something radically new under the sun; it’s the footprint of a monetary fraud breathtaking in its magnitude.

In essence, during the last 15 years the Fed has gifted the US economy with a $4 trillion free lunch. Uncle Sam bought $4 trillion worth of weapons, highways, government salaries and contractual services but did not pay for them by extracting an equal amount of financing from taxes or tapping the private savings pool, and thereby “crowding out” other investments.

Instead, Uncle Sam “bridge financed” these expenditures on real goods and services by issuing US treasury bonds on a interim basis to clear his checking account. But these expenses were then permanently funded by fiat credits conjured from thin air by the Fed when it did the “takeout” financing. Central bank purchase of government bonds in this manner is otherwise and cosmetically known as “quantitative easing” (QE), but it’s fraud all the same.

In essence, Uncle Sam has gotten $4 trillion of “something for nothing” during the last 16 years, while the Washington politicians and policy apparatchiks were happy to pretend that the “independent” Fed was doing god’s work of catalyzing, coaxing and stimulating more jobs and growth out of the US economy.

No it wasn’t!

What it was actually doing was not stimulating the main street economy, but falsifying and inflating the price of financial assets. That happened directly in the Treasury and GSE (i.e. Fannie Mae and Freddie Mac) markets where the Fed made its massive debt purchases, but that Big Fat Bid obviously cascaded through the pricing mechanism of the entire financial system via the linkage of credit spreads, cap rates and carry trades, including the PE on equities.

By contrast, the mainstream Keynesian delusion that the Fed has been stimulating GDP growth rather than speculator windfalls is rooted in the hoary concept of “aggregate demand” deficiency. That is, the proposition that the macroeconomy has a natural growth rate based on potential output at full employment, and that when actual growth falls short of that benchmark, it is the job of the state—–and in recent times, especially its central banking branch——to stimulate sufficient aggregate demand to close the gap.

This is claimed to be the essence of the welfare enhancing function of the state. To wit, pushing a continuously lapsing and faltering private capitalism toward its inherent full employment potential, thereby generating jobs, income and wealth that would otherwise not happen.

Alas, that’s complete self-serving clap-trap. At the end of the day, the full employment myth has conferred opportunities for employment and power on economists who would otherwise not have much more social function than astrologists; and it has provided an all-purpose blanket of rationalization for politicians bent on using the tools of state intervention and subvention to do good, do favors and do re-election.

The truth is, there can never by an honest shortage of “aggregate demand” because the latter is nothing more than spending for consumer and capital goods that is financed from the flow of income and production. As “Say’s Law” famously and correctly insists, “supply creates its own demand”.

And even more to the point, it is “supply” that is the hard part of the economic equation. It stems from work, exertion, sweat, discipline, enterprise, innovation, invention, sacrifice and savings.

Spending from what has already been produced is the easier part. And given human nature,  there is virtually no prospect of a shortage of aggregate demand——and most certainly not one which is chronic and continuous, as is implicit in the 24/7 stimulus policies of modern central banking.

Indeed, the idea that the state can create “aggregate demand” ex nihilo stems from a one-time parlor trick that was operative in the second half of the 20th century. Central banks discovered that they could stimulate credit expansion by supplying plentiful reserves to the fractional reserve banking system, thereby causing credit growth that was not funded from current savings.

That did permit a temporary breach of Say’s Law because spending derived from freshly minted banking system credit was additive to spending for consumer and capital goods financed out of current income and production. But there was a catch. Namely, continuous credit expansion resulted in the steady leveraging-up of household and business balance sheets.

Eventually, balance sheets became saturated and a condition of Peak Debt was achieved. In the case of the household sector, leverage ratios against wage and salary income rose from a stable historic level of about 75% prior to 1980 to a peak of 220% in 2007.  Then the parlor trick was over and done because in the aggregate there was no credit-worthy headroom left on balance sheets.

In fact, as shown in the chart below, the household sector has been slowly deleveraging its wage and salary income since the Great Financial Crisis. What that means is that with respect to the largest slice of the income pie by far—–the wage and salary earnings of households——Say’s Law has been re-instated. Household consumption is now constrained to the growth of production and income.

There is no more central bank “stimulus” through the household credit channel of monetary transmission.

Household Leverage Ratio - Click to enlarge
Household Leverage Ratio – Click to enlarge

Likewise, total US business borrowings have increased from $11 trillion to $13 trillion since the fall of 2007, but it has not lead to additional investment spending. Instead, the Fed fueled inflation of financial assets has induced businesses to cycle virtually 100% of their incremental borrowings into financial engineering. That is, stock repurchases and M&A deals.

But financial engineering does not add to GDP or increase primary spending; it results in the re-pricing of existing financial assets. That is, it gooses stock prices higher, makes executive stock options more valuable and confers endless windfalls on the fast money speculators who work the financial casinos.

Indeed, as we demonstrated in a post earlier this week—–precisely 100% of the entire increase in corporate borrowing since the turn of the century has been pumped back into the casino in the form of stock repurchases. Accordingly, the business investment channel of monetary transmission is over and done, as well.

The world is drowning in excess production capacity owing to the massive worldwide credit inflation and repression of capital costs during the last two decades. That was the effect of total global credit growth from $40 trillion in the mid-1990s to upwards of $225 trillion today—-an $185 trillion expansion that exceeded the growth of global GDP by nearly 4X during the same period.

Under this condition the diversion of corporate borrowing to financial engineering and stock buybacks is a no-brainer. Prospective returns on real productive assets are jeopardized by the immense overhang of excess capacity and the unfolding contraction of profit margins and CapEx, whereas stock buybacks and M&A deals bring immediate excitement and financial rewards to the C-suite.

So we go back to the beginning. The Fed and central banks in general are pushing on a fiat credit string because Peak Debt has arrived. All of today’s massive central bank intrusion is ending up in the secondary markets where it is causing the falsification of financial asset prices and massive, unearned and ultimately destructive windfall gains to speculators.

Here’s the essence of the Keynesian full employment/potential GDP myth. The learned economic doctors have simply pulled a fancy version of the old story about the professor of economics who fell into a 30-foot hole with a colleague. At length, the latter inquired about the professor’s plan to get out. “Assume we have a ladder”, said he.

There is absolutely nothing more to potential GDP and the so-called output gap than an assumed ladder. In the context of an $80 trillion global GDP enabled by today’s massive trade, capital and financial flows and current information technology, “potential output” is impossible to measure and is constantly changing.

There is no way to know whether an auto plant is at 95% utilization or 65%; it all depends on ever-changing costs of labor, the number of scheduled shifts, the complexity of the vehicles being assembled at any moment in time and the line speed, which. in turn, is a function of equipment, automation and technology variations over time.

Likewise, when on the margin labor is deployed by the gig in the DM economies and when the rice paddies have not yet been fully drained in the EM economies, there is no reasonable, accurate or meaningful way to measure labor utilization, either.

So there is no grand Keynesian economic bathtub whose full employment dimensions can be measured; and there is no way for the Fed or other central banks to fill it right to the brim with extra demand stimulus, anyway. Peak Debt has blocked the monetary policy transmission channels.

In fact, tepid growth of labor hours, productivity and output is a supply side problem. In that respect, replacing the current burdensome 16% payroll tax on America’s high cost labor with a consumption tax on the nation’s heavily imported goods would do more for supply side growth than central bankers could ever accomplish in a month of Sundays.

Likewise, there is no want of inflation, and the 2% target is simply a central banker’s con job. By selecting the most flawed and under-stated measure possible—-the PCE deflator less food and energy—–our monetary central planners rationalize their massive usurpation of power.

But there isn’t an iota of proof that 2.0% goods and service inflation is any more conduce to real growth of output and wealth than is 1.4% or even (0.2%). In any event, there is plenty of evidence that we are and always have been at 2.0% CPI inflation or better.

When an array of the inherently flawed inflation indices are considered as shown below, there is no meaningful shortfall from 2.0% since 2010 or during the entire period when the Fed has claimed to be struggling against lowflation. And that’s especially so when the BLS’ preposterous owners’ equivalent rent (OER) is replaced with empirical gauges of housing rent inflation.

CPI, PCE and Reality  - Click to enlarge

So what is to be done, as Lenin once queried?

In a word it is this. Fire the Fed. Attend to supply side policy. Let market capitalism do the rest.

The cult of central banking is dead in the water.

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« Reply #74 on: May 02, 2016, 08:44:08 AM »

Why the Fed will never get what it wants: Strategist
Brian Price   | @PriceCNBC
3 Hours Ago
COMMENTSJoin the Discussion

The Federal Reserve surprised few last week when it keep interest rates unchanged, noting that it "continues to closely monitor inflation indicators and global economic and financial developments." However, one market watcher has a blunt message for Fed chair Janet Yellen: You're placing your hope in a fairy tale.

On a recent CNBC's "Futures Now," Lindsey Group chief market analyst Peter Boockvar made the case that the Fed will never get the "perfect" conditions they seek before increasing short-term rates once again.

The Fed's mandate "isn't to have a perfect world. That only exists in fairy tales, dreams and in your econometric models," Boockvar said in a recent note to clients. He believes that the Fed's monetary has been far too accommodative under Yellen as well as under Ben Bernanke.

Boockvar argued that the Fed has been taking cues from shaky international banks, and that doing so will always offer a reason to keep interest rates low.

'Excuse after excuse'

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In Wednesday's statement, the strategist noted new suggestions that the Fed is shifting its focus to concerns over international development. In its March statement, the Fed said that "global economic and financial developments continue to post risks," a line that does not appear in the more recent language.
"It's been excuse, after excuse, after excuse," Boockvar said. "This is why, eight years into an expansion, they've only raised interest rates once. They're afraid of their own shadow. They're in a terrible hole that they're not going to be able to get out of."
Whether looking at the Fed, the Bank of Japan, or the European Central Bank, Boockvar sees a landscape littered with policy errors.

"They all believe that, by making money cheaper, you can somehow generate faster growth," Boockvar said.
Based on this, Boockvar said that central bankers are losing their credibility and their ability to generate higher asset prices, putting the stock market in a precarious position.

"In a world that's already choking on too much debt, the cost of money really isn't an important variable and it is not a binding constraint on anybody's decision making."

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« Reply #75 on: May 02, 2016, 02:13:21 PM »

Dudley: Fed may need more powers to support securities firms during crises
5 Hours Ago
COMMENTSJoin the Discussion
New York Federal Reserve President William Dudley
Getty Images
New York Federal Reserve President William Dudley
The U.S. Federal Reserve may need more powers to provide emergency funding to securities firms in times of extreme stress in order to deal with a liquidity crunch, New York Federal Reserve President William Dudley said on Sunday.

"Providing these firms with access to the discount window might be worth exploring," Dudley said in prepared remarks at a financial markets conference in Amelia Island, Florida organized by the Atlanta Fed.

The discount window is a credit facility through which banks borrow directly from the U.S. central bank in order to cope with liquidity shortages.

The Fed currently has limited ability to provide funding to securities firms in such situations, with the discount window only available to depository institutions.

Janet Yellen
Fed 'afraid of its own shadow' on rate policy: Strategist
But the transformation of securities firms since the financial crisis, Dudley said, with the major ones now part of bank holding companies and subject to capital and liquidity stress tests, meant the environment has now changed.

"To me, this is a more reasonable proposition now than it was prior to the crisis when the major dealers weren't subject to those safeguards," he said.

Dudley did not mention monetary policy or the U.S. economic outlook in his remarks.

Other "significant gaps" remain in the lender-of-last-resort function, Dudley added.

On this, he cited work being done on a global level by the Bank of International Settlements, known as the central banks' central bank, which is studying deficiencies with respect to systemically important firms that operate across countries.

Dudley called for greater attention in order to determine which country would be the lender-of-last-resort for such companies during another crisis.

"Expectations about who will be the lender-of-last-resort need to be well understood in both the home and host countries," he said.

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« Reply #76 on: May 04, 2016, 08:44:48 AM »

admin | May 4, 2016
SAN FRANCISCO (May 4): San Francisco Federal Reserve President John Williams said Tuesday that all he needs to see is economic growth that is on track with his forecast, continued job gains and slightly stronger inflation for him to support an interest-rate hike in June.
“As long as the inflation data are consistent with the forecast I have of moving toward 2%, that would be enough” to support a June rate hike, Mr Williams said in an interview on Bloomberg Radio.
Mr Williams said he expects economic growth of about 2% this year.
Categories: Latest News
Source: The Edge

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« Reply #77 on: May 06, 2016, 07:09:01 AM »

Fed's Bullard undecided on the right path for interest rates
4 Hours Ago
COMMENTSJoin the Discussion
James Bullard, president of the Federal Reserve Bank of St. Louis
Chris Goodney | Bloomberg | Getty Images
James Bullard, president of the Federal Reserve Bank of St. Louis
Global headwinds that have partly prevented the U.S. central bank from raising rates again may have dissipated, St. Louis Federal Reserve President James Bullard said on Thursday.
"Those factors appear to be waning during the first half of 2016," Bullard said in prepared remarks at an event in Santa Barbara, California.

As the Federal Reserve mulls its next interest rate hike, Bullard, a voting member of the Federal Open Market Committee, said he is undecided on the path forward for U.S. interest rates.

Traders work on the floor of the New York Stock Exchange.
Stocks close narrowly mixed; Street awaits jobs Friday
Federal Reserve policymakers in March forecast two rate increases this year but have been cautious amid slowing global growth and mixed U.S. economic data. Traders expect the next hike to be delayed until at least December of this year, according to Fed Fund futures on CME FedWatch.
Bullard had traditionally been considered a hawkish member of the Federal Reserve, arguing for rate hikes for much of 2015. But since then, Bullard has wavered on his views on the economy.

In February, he said given falling inflation, normalization would be unwise, but also said he thought odds of a recession were low. Then, in March, Bullard reversed course, saying the next rate hike might not be far off as the decision to pause hikes weighed on global growth. Then this week, now undecided, Bullard told The New York Times that the next U.S. recession is likely to happen before the Fed can normalize.

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People from Eastern Maine Health Services distribute employment information at a job fair, April 11, 2016 in Brunswick, Maine.
Whoa: Job growth slows more than expected in April

In Thursday's address, Bullard added that financial stress has fallen according to recent readings and that the effects of a stronger dollar also appeared to have waned. Weak U.S. first-quarter gross domestic product growth appears at odds with months of strong job gains.
Bullard said the U.S. labor market is "at or possibly well beyond reasonable conceptions of full employment" and noted a recent upward trend in inflation.

"Still, combining actual data from the second half of 2015, the first quarter of 2016, and tracking estimates for the current quarter, the suggestion is that the U.S. is growing below a trend pace of 2 percent," he said.

Bullard said it was difficult to conclude whether predictions by the Fed or by the markets for the central bank's longer-run path of rate rises was more accurate.

The next major indicator comes on Friday when the Labor Department issues its monthly employment report for April.
The Fed hiked rates for the first time in a decade from near zero in December and next meets on June 14-15.

— Reporting by CNBC's Steve Liesman and Elizabeth Schulze. Contributions by Anita Balakrishnan.

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« Reply #78 on: May 09, 2016, 05:25:17 PM »

China data may sway Fed's rate decision
By Reuters / Reuters   | May 9, 2016 : 4:28 PM MYT   
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LONDON (May 9): The Federal Reserve's debate over whether to raise US interest rates in June may be decided in the coming week, as investors look for any cracks in China and evidence of a solid start to the second quarter in the United States.

A run of Chinese data is expected to show activity moderated in April after a strong showing in March. It started on Sunday with a greater-than-expected fall in China's April exports and imports.

For much of the past year, China has been at the centre of financial market turmoil, sometimes offering reassurance but mostly fuelling concern its economy — and global growth — are losing momentum.

Economic activity increased in the first quarter because of record bank lending. But worries about a commodity bubble and fast-rising home prices, as well as spreading debt defaults and bad loans, led regulators to tap the brakes on expectations of further aggressive stimulus.

Any evidence of a further slowdown in China beyond the already poor trade numbers could dissuade the US Fed from tightening policy as expected in June.

Fed policymakers acknowledged last month there were risks to the US economy and suggested two more rate increases were in store this year. That was only half what they thought when they tightened policy for the first time in a decade late last year.

Casting further doubt on the case for raising rates, the US economy added the fewest number of jobs in seven months in April and Americans dropped out of the labour force in droves.

Retail sales figures due on May 13 are expected to show sales picked up in April after falling 0.4% in March.

"Consumer spending started the year on a sluggish note, but we look for it to strengthen in Q2, both in overall terms and in the goods component specifically," said James Sweeney at Credit Suisse. "The monthly April report on retail sales should provide preliminary support for our Q2 forecast."

A May reading of the University of Michigan consumer sentiment survey on Friday, which the Fed is sensitive to, will probably also show a pick up.

Six state Fed chiefs are due to speak in the week, including the voting heads from Boston, Cleveland and Kansas City.

No change is expected from the Bank of England on Thursday. Bank policymakers are likely to be preoccupied by the June 23 referendum on whether Britain should remain a member of the European Union.

Most economists say a vote to leave damage the economy and weaken sterling. Finance Minister George Osborne will present his views on EU membership to lawmakers on Wednesday.

"The interest will lie with the accompanying Quarterly Inflation Report and meeting minutes for the committee's judgement on the impact of sterling's fall since February plus any comments about the impact of the referendum," Investec told clients.

Britain's central bank will probably lower its growth projections but hold inflation forecasts steady in the quarterly report, according to a majority of economists polled late last month.

The central banks of Korea, Thailand and the Philippines also meet during the week. No change is expected from them, either.

On Friday, after a light data week, Eurostat will update its preliminary euro zone GDP data. The region's economy grew at its fastest pace in five years in the first quarter, 0.6%, driven by unlikely stars such as France and Spain.

It has now grown larger that its peak before the financial crisis — although it took eight years to recover — and last quarter's growth rate exceeded growth in both the US and Britain

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« Reply #79 on: May 10, 2016, 07:21:12 AM »

财经  2016年05月09日
就业数据虽差 不排除联储局加息

就业数据虽差 不排除联储局加息
伊尔艾朗表示,联储 局今年或加息2次。



安联首席经济顾问伊尔艾朗(Mohamed El-Erian)称,联储局今年或加息2次。

太平洋投资管理公司(Pimco)的基尔瑟(Mark Kiesel)与纽约联储行长达德利(William Dudley)的讲话亦与上述观点遥相呼应。







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« Reply #80 on: May 12, 2016, 07:22:02 AM »

The Fed never anticipated low rate impact on financial sector: Fisher
Tom DiChristopher   | @tdichristopher
12 Hours Ago
COMMENTSJoin the Discussion

Persistently low interest rates are doing "a lot of damage," particularly to the financial industries that underpin the U.S. economy, former Dallas Federal Reserve President Richard Fisher said Wednesday.

The companies Fisher said he's most worried about are insurers.

"Insurance companies, particularly life companies, are like noble oxen. They pull the cart forward steadily forever and ever and ever. They're living in a 1 percent world in this country, but they're pulling a 3-to-6 percent liability cart. It doesn't square," he told CNBC's "Squawk Box."

Low interest rates are a major risk for insurers because the income they derive from investments — mostly in safe assets like Treasurys — may be insufficient to fund payouts to customers in low-rate environments.

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Markets are too focused on Fed: Kashkari
Fisher said Fed policymakers did not anticipate the scope of easy money's impact on the financial sector.

"Bank's interest margins are being hammered. Money-market funds are trying to squeeze out a return. This is the kind of stuff, to be honest, sitting at the table, we did not foresee at the FOMC," he said, referring to the Federal Open Market Committee.

Germany is in even worse shape because the vast majority of Germans save through life insurance and their pension funds, he added.

Fisher reiterated his opinion that the Fed should raise rates by a quarter-percent at its June or July meeting, and then at least once again in the second half of the year. The FOMC raised rates a quarter-percent in December from nearly zero percent.

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« Reply #81 on: May 18, 2016, 08:15:38 AM »

Cramer: Oil could be pushing the Fed to raise rates—a bear collision disaster
Abigail Stevenson   | @A_StevensonCNBC
1 Hour Ago
COMMENTJoin the Discussion

Stocks are controlled by two masters: oil and the Federal Reserve, Jim Cramer says. The key is to keep them separate because if the two masters bump into one another, the results could be disastrous.

They collided on Tuesday following the report that the U.S. consumer price index rose 0.4 percent last month, which was higher than the 0.3 percent expected. The fear of higher inflation introduced the theory that rising oil prices could mean that the Fed will institute multiple rate hikes this year.

"If that is the case, there is more downside ahead even as I think you could make a very convincing argument that the inflation we have right now can't be curbed by higher rates," the "Mad Money" host said.

At this point, Cramer is praying that Fed chief Janet Yellen is flexible enough to see that the Fed can't stop inflation.

Bears in a fight, colliding
Richard McManus | Getty Images
"Suddenly the increased price at the pump has moved the needle to the point where the CPI simply can't be ignored by the Fed."
-Jim Cramer
The most worrisome factor to Cramer was the increase in the cost of gasoline. For a while it seemed that oil could rally and propel the market higher, it seemed like a win-win situation because it didn't show up in inflation numbers.

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"Suddenly the increased price at the pump has moved the needle to the point where the CPI simply can't be ignored by the Fed," Cramer said.

Oil has now become the tipping point in the discussion of whether the Fed will raise rates next month in order to curb inflation.

Yet, Cramer found the argument for inflation clueless on many levels. Things like housing and health care costs that are impacting inflation cannot be controlled by the Fed. Additionally, higher rates would be disastrous for oil producers who are trying to meet the demand of bankers. Higher rates could mean marginal producers could sink and energy inflation could accelerate.

"In other words, higher rates won't stop this kind of inflation. If anything, a rate hike right now could make inflation worse," Cramer said.

While Cramer acknowledged that one slightly overheated inflation number can't change the entire outlook for the market, it does reintroduce the notion that two rate hikes this year are possible. Many bulls were convinced there would be none or only one.

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« Reply #82 on: May 18, 2016, 04:31:41 PM »

回應(0) 人氣(440) 收藏(0) 2016/05/18 14:31
MoneyDJ新聞 2016-05-18 14:31:42 記者 陳瑞哲 報導
美國通膨升溫痕跡鑿鑿,但聯準會(FED)至今卻還充耳不聞,從去年12月升息後,找各種藉口一直按兵不動至今,讓哈佛大學重量級經濟學教授費德斯坦(Martin Feldstein)忍不住痛斥FED施政沒抓住重點,並警告升息拖太久恐更危險。

維持物價穩定是央行最主要職責,1970 至1980 年期間,美國就曾因FED的輕忽造成史上首次停滯性通膨,當時通膨一發不可收拾,物價指數狂飆升至兩位數,而GDP則是連續五季衰退。現在的FED主席葉倫為了維持低利率,又再一次拿美國經濟穩定與通膨對賭。





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« Reply #83 on: May 19, 2016, 07:23:31 AM »

2016年05月19日 06:18 AM
英国《金融时报》 萨姆•弗莱明 华盛顿报道






继去年12月加息25个基点以来,美联储的政策制定者们一直在权衡第二次加息的利弊。由于美联储主席珍妮特•耶伦(Janet Yellen)强调她希望在政策制定方面采取谨慎做法,许多投资者一直不太相信美联储在6月就会再次加息。


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« Reply #84 on: May 19, 2016, 08:54:39 AM »

Why London could decide the next US rate hike
Patti Domm   | @pattidomm
1 Hour Ago
COMMENTSJoin the Discussion
The Fed sent a loud and clear signal that it would like to raise rates in June, but the decision may end up in the hands of the British.

The Fed's release of its April meeting minutes showed the Fed's discussion reflected more of the recent comments from Fed regional presidents, who have also been warning markets were not reflecting its intention to hike interest rates. However, the minutes started a new divide on Wall Street: Fed watchers who think the Fed will move in June and those who think the Brexit vote eight days after the Fed's meeting could hold them back. Brexit is the term for the U.K. vote on whether to remain in the European Union.

The markets had been bracing for a more hawkish message from the Fed, but its emphasis on June was an even hawkier surprise. "They were worried the market was underestimating a rate hike this year," said Mohamed El-Erian, Allianz chief economist. The Fed funds futures are now pricing in a 27 percent chance of a June hike, up from 4 percent a week ago.

Dove vs Hawk
Okea (l) | Vicky Hart (r) | Getty Images
"They are sending the clueless market a clue, make no mistake about it. A rate hike in June. Bet on it," wrote Chris Rupkey, chief financial economist at MUFG Union Bank. But others, including El-Erian, believe the Fed is really pushing the market to a different view — a rate hike is coming soon, but it's not exactly certain when.

"If you work backwards, we will definitely have a rate hike this year, maybe two. How early? July. Could it be June? Yes, but the polls for Brexit would have to give them a lot of confidence that British citizens will vote to remain," said El-Erian on CNBC. "It's hard to say between June and July, because they've got this massive Brexit vote on the 23rd."

BlackRock chief investment officer, global fixed income Rick Rieder told CNBC that Brexit could hold the Fed back. "In front of Brexit, I think it's a low probability," said Rieder. Sterling has been rising with new poll data showing that the anti-exit view is leading, but there have been other polls that show the opposite. The concern is that markets could become volatile going into and after the vote.

Prime Minister David Cameron and Mayor of London Boris Johnson
UK's Johnson likens march of European Union to Hitler, Napoleon
"Longer term, I don't think [Brexit] is an alarming issue for two reasons. One is it will be replaced with something else. Britain will have an association agreement with the EU," said El-Erian. "Second is Britain was never interested in the EU as an ever-closer union. It was interested as a free trade zone, so there was a different vision. In short, there will be uncertainty about what it will be replaced by and how quickly, so there will be short-term disruptions, but in the long term, I'm not an alarmist at all."
While Brexit has long been mentioned as a factor that could hold the Fed back in June, it is now rising higher up the list since some of the recent economic data has shown improvement. The Fed specifically mentioned June in its minutes, a strong message to the markets that the June meeting does have potential.

So, now the focus shifts to Fed speakers, who are still leaning on the economic data as the determining factor, but their words could help further shape the market view on timing. The Fed has forecast at least two rate hikes this year, while the markets had been expecting the first next year.

Fed Chair Janet Yellen
Fed likely to hike in June if data improve: Minutes
Fed watchers will especially be zoning in on the words of the key core Fed members, Fed Chair Janet Yellen, Vice Chairman Stanley Fischer and New York Fed President William Dudley. Both Dudley and Fischer speak Thursday.
"Dudley will be key," said Michael Hanson, senior economist at Bank of America/Merrill Lynch. Dudley, viewed as dovish, holds a press briefing on the economy at 10:30 a.m. EDT., while Fischer is speaking at 9:15 a.m. at an event honoring economist Michael Woodford at Columbia University. Yellen has an appearance at Radcliffe in May but on June 5, she speaks in Philadelphia at the World Affairs Council.

"On June 6, she's got a full-blown speech on the outlook and the global context that will be key. If something global is going to slow the Fed, that will be good time for her to make that point," Hanson said.

Hanson said he recently changed his expected timing on the next Fed rate hike from June to September. "We had thought June, up until a couple weeks ago, when the data softened, and the uncertainty was lingering. There was Brexit and all that stuff, and I felt the committee was going to let inflation overshoot," he said.

Blame this for that spike in weekly jobless claims
Besides the Fed speak on Thursday, markets will be watching closely when unemployment claims are released at 8:30 a.m. after last week's surprising jump. About 20,000 of the 294,000 were blamed on New York City schools' spring break by several economists. Expectations are that claims fell back to 272,000. The Philadelphia Fed survey is also released at 8:30 a.m.
Major companies reporting Thursday include Wal-Mart, ****'s Sporting Goods and Advance Auto Parts before the bell. After the close, Gap, Applied Materials, Ross Stores and Shoe Carnival report.

Stocks sold off after the Fed but ended the day flat. The S&P 500 rose less than a point to 2,047. Treasury yields continued this week's move higher, with the two-year at 0.88 in late trading after touching 0.92 percent. The Fed-sensitive two-year has been outpacing the 10-year, which was little changed at 1.85 percent.

"Don't go too crazy on the June rate hike. There's still a lot of hurdles and even if those hurdles are met, there's still a Brexit vote," said John Briggs, head of strategy at RBS

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« Reply #85 on: May 19, 2016, 08:59:52 AM »

Could this post-Fed bond selloff be a repeat of ‘taper tantrum’?

By Ellie Ismailidou
Published: May 18, 2016 5:04 p.m. ET

10-year Treasury yield logged its largest daily spike in 5 months after the Fed’s surprise
Could Fed Chair Janet Yellen send the bond market into another tantrum?
A spike in Treasury yields, which posted Wednesday their largest daily jump in five months after the Federal Reserve said it is open to hiking interest rates in June, fueled fears of a repeat of the 2013 “taper tantrum,” during which yields skyrocketed as government bonds got hammered.

In May 2013, after a mere suggestion of an imminent reduction in bond purchases by then-Fed Chairman Ben Bernanke, panic spread in the bond market, leading the 10-year Treasury yield TMUBMUSD10Y, +0.24%  to gain 140 basis points in just four months.

On Wednesday, the 10-year yield jumped 12.3 basis points, logging its largest daily jump since December, after the minutes from the Fed’s April meeting showed most Fed policy makers were ready to lift interest rates in June, if the economy improved.

The news clearly surprised the market, which as recently as last week had all but ruled out the possibility of a rate hike in June.

The dollar soared to a one-month high after the release, while the market-implied probability of a June rate hike jumped in the fed-funds futures market.

The sharp selloff in the Treasury market brought back painful memories of the 2013 bond rout, making analysts wonder if this is a precursor of a “Taper Tantrum: Part 2.”

Though the steepness of the yield increase seems similar to 2013, analysts noted that there are fundamental differences between 2013 and today’s market.

First of all, in 2013, Bernanke’s taper talk led to a decrease in inflation expectations, as the market was worried that the tapering process would choke off growth and inflation.

But in today’s market, the opposite appears to be happening. “Even though the Fed would like to talk up the risks of too high inflation in the future, markets are quite a distance away from pricing such an outcome,” said Aaron Kohli, interest-rate strategist at BMO Capital Markets, in emailed comments on Wednesday.

“The inflation risk premium that is priced into the curve is minimal and the market’s forward view on inflation is equally abysmal,” Kohli said.

From a technical standpoint, the overall yield of a Treasury bond can be parsed into its “risk-neutral” yield, which captures expectations for future levels of the federal-funds rate during the bond’s lifetime, and its “term premium,” which captures the influence on the yield of all other forces, including future inflation expectations.

So Treasury yields “continue to be depressed by other forces” besides rate-hike expectations, a report by Capital Economics noted on Wednesday.

According to the report, the “term premium” of the 10-year Treasury yield has recently fallen close to its lowest in more than 50 years, as the following chart shows.

Capital Economics
Another important element that makes this market different from the 2013 taper tantrum is foreign demand for U.S. Treasurys, which should keep any increase in Treasury yields contained, analysts said.

With investors fleeing ultra-low and negative interest rates in Europe and Japan, foreign demand for U.S. Treasurys has recently spiked, as U.S. government debt offers a higher yield compared to other countries of comparable credit quality, such as Germany and Japan.

According to the most recent Treasury International Capital data, foreign demand was highest in long-term Treasurys, with foreign investors buying $23.6 billion in long-term Treasurys in March, the highest amount in four months, as the following chart shows.

Bank of America Merrill Lynch
On Wednesday, the spike in U.S. Treasury yields led the yield differential, or spread, between the 10-year Treasury yield and the 10-year German bond TMBMKDE-10Y, +29.83% to widen to 171.5 basis points, its widest since late March, according to FactSet, as the following chart shows.

The increasing yield differential is bound to make U.S. Treasurys more attractive, fueling foreign demand that would push Treasury prices higher and yields lower, analysts said.

“Take a look at where [the German] bund yield is and you’ll see why Treasury yields can’t really rise too much,” said Jack Flaherty, a fixed-income portfolio manager at money-manager GAM.

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« Reply #86 on: May 19, 2016, 10:50:06 AM »

《美股》Fed偏鷹、美元衝!銀行樂、原料哭 道瓊平盤
回應(0) 人氣(863) 收藏(0) 2016/05/19 07:32
MoneyDJ新聞 2016-05-19 07:32:00 記者 郭妍希 報導
聯準會(Fed)於18日午後公布的FOMC 4月會議記錄顯示,大多數與會官員認為,假如經濟持續改善,那麼6月升息應是適當舉措。不過,官員們對到時候經濟狀況是否可以達標,意見仍相當分歧。部分人並擔憂,金融市場對6月升息根本沒有做好心理準備。

其實,在FOMC 4月發布的會後聲明中,Fed刻意拿掉了「全球經濟與金融發展持續構成風險」這句話,在當時就暗示金融市況有所改善。在此之後,多名Fed官員紛紛發表了鷹派觀點,只是投資人仗著Fed主席葉倫(Janet Yellen)立場仍鴿派,至今仍把鷹派的警告當成耳邊風。
路透社報導,追蹤美元相對六大主要貨幣一籃子匯價的ICE美元指數(US Dollar Index,簡稱DXY)18日聞訊跳漲0.69%,收盤創3月底以來新高。
MarketWatch報導,Tradeweb報價顯示,對Fed利率決策較敏感的美國2年期公債殖利率在FOMC紀錄公布後驟升7.7個基點至0.900%,創3月15日以來新高,也是2015年12月29日以來最大單日漲幅。銀行類股受到殖利率跳升有望推高獲利的激勵而走強,花旗(Citigroup Inc.)、美國銀行(Bank of America Corporation)分別跳漲4.97%、4.85%。
原物料類股走軟。煤礦與天然氣供應商Consol Energy Inc.、石油和天然氣探勘暨生產商契薩皮克能源公司(Chesapeake Energy Corp.)與全球產量最大金礦商加拿大巴瑞克黃金公司(Barrick Gold)分別下跌6.77%、2.04%與9.03%。世界最大上市銅礦商美國自由港麥克墨倫公司(Freeport-Mcmoran inc.)也同步下挫8.43%。
民生必需品(consumer staples)類股連續第2個交易日下挫,肉品及食品加工商Hormel Foods Corp.大跌8.56%、創2008年最大單日跌幅,主因毛利率萎縮引發疑慮。好市多(Costco Wholesale Corp.)過去6個交易日有5日走軟,沃爾瑪(Wal-Mart)則出現去年10月以來最大兩日跌幅。
美國第六大零售商Target Corporation 18日公佈的2016年第1季度(2-4月)營收不如市場預期,並預估本季同店銷售將因消費趨勢趨緩而下滑0-2%,每股盈餘經調整後將降至1.00-1.20美元。Reuters報導,Target執行長Brian Cornell 18日在財報電話會議上坦承Target跟主要競爭對手的銷售額趨勢都出現轉弱跡象。他預期零售商為了出清過多庫存將加大降價力道。Target 18日放量跳空大跌7.62%,收68.00美元、創1月20日以來收盤新低。
在個股消息方面,美國豪華電動車製造商特斯拉(Tesla Motors Inc.)受到高盛建議買進、認為該公司勢將打亂汽車產業整體生態的激勵,終場跳漲3.18%、收211.17美元。不過,特斯拉盤後公布要辦理20億美元的現金增資,高盛是主要的承銷商之一,消息傳來引發網友撻伐

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« Reply #87 on: May 20, 2016, 07:25:37 AM »

SaxoBank CIO Warns "Central Banks Can Do Nothing"
Tyler Durden's pictureSubmitted by Tyler Durden on 05/19/2016 15:05 -0400

Bank of England Bernie Sanders BOE Brazil Central Banks China Davos Donald Trump European Central Bank European Union Federal Reserve France Germany Global Economy Greece International Monetary Fund Ireland Janet Yellen Monetary Policy Nationalism R Squared Reality recovery Saxo Bank Volatility World Trade

Authored by SaxoBank's Michael McKenna via,

2016 has seen a popular reaction against zero-bound policies
Political elites are struggling to preserve an unfruitful status quo
'The world has become elitist in every way': Jakobsen
Political middle has become crowded, stagnant; new spectrum of ideas needed
Investment in education and research needed; zero rates are a dead end
Saxo chief economist remains 'very positive' overall
In April 2015, Saxo Bank chief economist Steen Jakobsen said that zero rates, zero growth, zero productivity, and zero reforms have left a great many countries adrift in a “new nothingness”.

The products of this nothingness, said Jakobsen, include apathy, stagnation and “an economic outlook based more in peoples’ heads than in reality”. On the cultural level, he continued, the widespread lack of dynamism and new ideas has empowered a political class that is “mainly interested in maintaining the status quo”, even as that status quo provides sharply diminishing returns.

US GDP growth, for instance, is hugging the zero line:

US real GDP
Source: Federal Reserve Economic Data
A little more than one year on and we remain, in terms of economics and monetary policy at least, profoundly entranced by this combination of zero-bound policies and continual “emergency measures”.
Culturally and politically, however, the past 12 months have demonstrated time and time again that nature abhors a vacuum.
In Europe, for instance, we have the spectacle of the European Union’s second-largest economy voting on whether it wants to leave the union next month. In the United States, the candidacies of Democratic senator Bernie Sanders and Republican front-runner Donald Trump have benefitted enormously from widespread frustration with the current consensus, particularly in the realm of trade where both candidates – one hard left, one populist right – point to a declining US manufacturing sector and a recovery bereft of “breadwinner” jobs as signs that the country has been led astray.
The list doesn’t end there. From the European migrant crisis to the rise of far-right political parties such as Germany’s Alternative für Deutschland and France’s Front National; from the the apparent stalling of the Federal Reserve’s policy normalisation plans to the European Central Bank’s continued adventures in quasi-permanent stimulus, the past 12 months have demonstrated that “nothingness” breeds restlessness.
This restlessness, as we have seen, will find release on the cultural level despite the hesitancy of central bank policy mandarins and political elites.
With this in mind, we sat down with Jakobsen to discuss the new nothingness, the even newer reactions to such, and his outlook for the global economy. The “new nothingness” thesis was based on zero rates, zero growth, zero reforms. But you hinted that all of this nothingness has spilled over into culture and politics as well… do these macro facts hinder peoples’ imagination, or their ability to deal with the problem?
Steen Jakobsen: Yes, I think so. This year, we see a growing gap between the central banks’ narrative – which is that you have a trickle-down impact from lower rates – and [the situation on the ground].
People understand that zero interest rates are a reflection of zero growth, zero inflation, zero hope for changes, and zero reforms.
In my opinion as an economist and a market observer, people are smarter than central banks. And because they are smarter, they can live with policy mistakes for a while because the narrative is very strong and because people like (European Central Bank head Mario) Draghi and (Federal Reserve chief Janet) Yellen have these platforms from which they not only talk but occasionally shout, and they are deemed to be “credible”, scare quotes mine…
We see [this gap] in the Brexit debate as well, where the elite and the academics talk down to the average voter. By doing that, of course, they alienate the voters from their representatives.
Jean-Claude Juncker
Counterpoint?: "Too many politicians are listening to their [voters]",
says European Commission president Jean-Claude Juncker
That’s what we see globally, that’s why Brazil is going to change presidents, why Ireland could not get its government re-elected with 6% growth. It’s not about the top line, but about the average person seeing that we need real, fundamental change.
TF: Earlier this year, you said that the social contract – the agreement between rulers and the ruled – is broken. It made me think of this year’s Davos meeting, which showed a leadership class terrified of slowing jobs growth and enamoured with the idea that population movements might be used to address this. Given the current unpopularity of globalisation and its effects, would you say that there are some things it is impossible for 21st century leaders and the led to agree upon? Is a social contract impossible?
SJ: No, it could be re-established, but it needs to be established on terra firma. Right now, we have a panacea in the form of low rates and the idea that things will somehow improve in six months. This has led to buyback programmes, a lack of motivation [and all the rest].
We as a society have to recognise that productivity comes from raising the average education level. People forget that all the revolutionary trends, the changes we’ve seen in history, have come from basic research. I don’t mean research driven by profit, but by an individual’s particular interest in one very minute area of a specific topic. This is what creates new inventions.
The second thing we often forget is that the military has been behind a lot of the industrial revolution. Mobile telephony, for example, had nothing to do with private citizens or companies – instead, it had a lot to do with the US military.
The key thing here is that we need to be more productive. If everyone has a job, there is no need to renegotiate the social contract.
The world has become elitist in every way. Before, you could start a company and build a small franchise; now, you have to be global, you have to have a billion users (if you’re an IT company), and [the pursuit of this] does not necessarily provide the best technologies, but only the biggest ones, the ones backed by [the firms with] the deepest pockets and largest web of connections.
We need to democratise the ability to be educated because we don’t know what’s going to work and not going to work. What we do know is that the social contract needs to come from better education levels.
There exist a huge number of studies that show a correlation – in mathematical terms, an R squared value – of 80% between the average education of a country or company and the productivity of same.
US unemployment rates
Source: Federal Reserve Economic Data
TF: Last week, you retweeted an article claiming that $127 billion in labour and services could be replaced by drones. Is automation, and the consequent lack of working-class jobs, partly responsible for “the new nothingness”?
SJ: Like everything else, there is an equilibrium between supply and demand at work here. On the supply side, we must consider that, in Western Europe at least, the amount of people needing jobs will be smaller in 10 or 20 years […] we need automation to pay for the lack of people in the workforce.
This is probably the first period in the evolution of technology where tech is deducting rather than adding jobs. But I think it ultimately will add jobs again, because productivity will pick up.
The demographic component here is that we will have less supply in labour markets in the future, so we need a more efficient way of doing things, a cheaper way.
That’s the good news. The bad news is that the next decade will be very, very challenging, and you haven’t even spoken about immigration and refugees – [this phenomenon] is adding to the labour market’s net supply while the net demand from employers is very low because of indirect taxes, regulations and the like.
So again, we need to go back and address what is feasible, or possible. I very rarely agree with the International Monetary Fund, for example, but if Germany can borrow at negative interest rates and invest in infrastructure, why wouldn’t they do it?
Infrastructure is and always will be productive; productivity improvements don’t happen because of silly shenanigans concerning politics…
There are a lot of things that can be done in the short term, but underneath all of this is a long-term view that you need to make people smarter. If they’re smarter, they’ll be more productive, more self-reliant, they’ll have better lives.
Yes, the political system is doing us a disservice, but we as individuals have also become extremely lazy and we are not intellectually challenged.
TF: You mentioned supply and demand and demographic changes. Before German chancellor Angela Merkel launched the refugee programme that has seen over a million people arrive in Germany, there were several reports from EU banks and think tanks calling for an injection of new working-aged people into Europe. Why were they calling for that if growth and the jobs market are stuck at zero?
SJ: Again there are two sides. Looking at the Organisation for Economic Co-operation and Development’s report on immigration and migration, for example, it shows that in the history of European immigration, 75% of all immigrants have been put into some kind of work and become productive taxpayers within one year of their arrival.
A refugee family arrives in Greece: Despite concerns about jobs and culture, Europe has historically had a great deal of success economically integrating newcomers. Photo: iStock
If you can retain that 75% inclusion rate, immigration will provide a huge boost in terms of injecting workers into a faltering demographic context. These are young, aggressive, multicultural people who are going to add colour and flavour to a continent that has been too homogenous for too long.
TF: But isn’t this very difference what is currently unpopular, what is fueling the rise of right-wing nationalism and other such movements?
SJ: People are always afraid of change. We are programmed to want today to be very much like yesterday. We don’t have high aspirations.
[On the other hand], people thrive when they are challenged. While the political narrative on refugees might follow the script you just laid out, for an economist like me it’s very clear: immigration is positive.
Of course, you can get too much of a good thing in too short of a time. If we knew now that the maximum amount [of incoming migrants] would be, for argument’s sake, 3 million over the next 10 years, then Europe could easily adapt and put these people to work.
The problem is that we currently have an infinite number and it is seen as an issue in the political spectrum – it’s not an economic issue.
There is nothing empirically that says refugees are a negative. It can challenge the social fabric, it can challenge the political spectrum, but to me that’s a good thing – we need openness.
Are there problems with this? Yes, but there are also problems with being a startup, or with riding your bike for the first time. I don’t think there is anything in life that doesn’t come with some pain. I think you need to play through the pain to become better.
TF: We mentioned the expansion of the political spectrum, how we’re seeing more interest in the far left, but I think notably we’re seeing more interest in the far-right with FN, with AfD and with Donald Trump in the US. Now, a huge amount of his support comes from the perception that globalisation – NAFTA, the TPP, Chinese manufacturing – has harmed US workers, and his solution is protectionism. What would a world in which the US enacted protectionist policies look like?
SJ: The irony is that we already have protectionism. Trade volume and trade value has been collapsing for the past 24 months. If you look at the trade talks that happen under the umbrella of the World Trade Organization, they have achieved absolutely nothing since China’s inclusion.
Donald Trump
"Bad deals!" Photo: iStock
There are also signs, practically and economically, that you can have too much of a good thing in terms of the division of labour. You can actually come to a point where you end up with an endless deficit in one country and an endless surplus in another if the deficit country does not have the ability to respond to the deficit, whether through a weaker currency or by being more productive.
The US is the prime example of this phenomenon which is why Trump is having so much of a tailwind.
The US has basically been living off of cheaper imports for a very long time. There is a lot of pain in the US, but for the middle class the pain has been cushioned by the fact that Chinese imports, Vietnamese shoes and the like are just so much cheaper.
Trump is having a good time right now, but it is not because he is right about protectionism versus free trade. It’s because we are at the end of the cycle where the US benefitted massively from lower import prices on consumer goods, which make up 70% of US consumption.
If, like Trump wants, an iPhone were to be produced in the US, it would cost $2,000 or more. This is why Trump is wrong – if that were the case, we wouldn’t see the sales that we do, we wouldn’t see the share price that we do.
TF: Wouldn’t his argument, or the protectionist one, be that real wages are stagnant, and if working class or manufacturing jobs had remained in the US, then people might not be so dependent on low prices?
SJ: That’s a circular argument. The fact is that the US doesn’t have a competitive productive base anymore. In some industries they do, like in cars, but to a large extent the car industry is subsidised.
It’s not that the US worker can’t do the work, he’s just massively more expensive. The price difference between producing Nike shoes in the US versus Vietnam is, in my best estimation, one to 10 if not one to 20.
The amount of US workers at or below the minimum wage is decreasing:
US wage growth
Source: Federal Reserve Economic Data
If you want to pay $500 for trainers, you can have the Trump version. The reality, as with so many things in life, lies between Trump and globalisation.
Let’s look at a Danish example: I never understood, for example, why [pharmaceuticals giant] Novo Nordisk don’t use some of the money they put into funds and trusts and [architecture] for basic research, for something – like penicillin, for example – that might do some good in the world.
Of course, they don’t do it because there’s no profit in, but [they are overlooking the fact that] something could come out of that research, something that would give them a new product…
Everyone in the world is just looking out for number one. We’ve lost the coherent belief that underlies the social contract.
Historically speaking, the most successful examples of social contract formation occurred under benign kings, under regimes that tolerated a sophisticated bureaucratic class and a robust opposition.
You have the [Russian president Vladimir] Putins and [Turkish president Recep Tayyip] Erdogans and these people who can execute power… they destroy society. You need both sides, and that’s why I talk about the far left and the far right creating a new spectrum a new middle ground.
The problem now is that the middle has effectively disappeared. Everyone wants to be in the middle, and the result is that there are no new ideas.
The media are always considering demand independent of supply and vice versa – nobody is covering the balance.
TF: Finally, you have said that continual emergency measures are unhealthy, and that’s very much where we are with central banks – negative rates, zero rates. But following the one US rate hike that happened, we saw a huge retreat from the US normalisation narrative.
If continual emergency measures are unhealthy, but the world’s arguably strongest economy has stalled on the road to normalisation, what can central bankers do?
SJ: They can do nothing. They should do nothing. They should go away.
If you look at monetary history prior to the formation of the Bank of England – the world’s first central bank – you will find that economic cycles were more stable then. Since the founding of the BoE and the Fed 102 years ago, we’ve seen an increased amount of business cycle up and downs.
Bank of England
The Old Lady of Volatility Street? Photo: iStock
The problem is that the fractional monetary system is based on access to credit, and the only institutions that create credit in this system are the banks.
Central banks keep these institutions alive with one hand, but choke them with the other. [The result, as we see this year] is that they are underperforming relative to the broader indices, so their ability to go to the marketplace and get more money is diluted.
We have a very vicious negative cycle that is initiated by the central banks. They’re not exclusively guilty, of course, and central bankers would rebut this argument with one saying that monetary policy cannot work on its own, you also need fiscal stimulus… but that’s all nonsense.
The way societies survive is by creating frameworks in which people can be productive. This is based, again, on basic research, which is in turn based on general education levels.
Let me end this little talk by saying that I am very positive. I think [the reaction to the new nothingness] is the best news that has happened in the last 10 years, because now people are starting to ask about the social contract.
We are now questioning the central banks’ model.
I could be wrong with all my criticism, but I am not wrong in saying that if you give people incentives and if you educate people, you become more productive.
If I'm running a football team, I don't try and improve my players' performance by feeding them pizza every day, but this is what the central banks are doing. They're feeding us burgers and pizza when we need food – training programmes, education, intellectual stimulation

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« Reply #88 on: May 21, 2016, 09:25:22 AM »

Week ahead will tell whether markets challenge Fed
Patti Domm   | @pattidomm
2 Hours Ago
COMMENTSJoin the Discussion

The key to the coming week will be about whether markets can absorb the Fed's rate hike message without getting indigestion.

The central bank bombarded markets in the past week with the message that it could raise interest rates for the second time in nine years as early as June, if the economy continues to improve as expected. What was different in its message was the new urgency of the timing, made clear in the minutes from its last meeting and in the comments from Fed officials.


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So there will be much interest in the handful of central bank speakers in the coming week, with particular focus on Fed Chair Janet Yellen, who will be at Harvard on Friday afternoon. Yellen is receiving the Radcliffe Medal, and she will also be interviewed by economist Greg Mankiw.

Fencing match
Matthew Stockman | Getty Images
There are also a few economic reports, including Monday's Markit PMIs for the U.S., Japan and Europe, and U.S. advanced international trade data Wednesday and U.S. durable goods Thursday. A smattering of companies also report earnings, with a few remaining retailers — Costco, Tiffany, Best Buy, Abercrombie & Fitch and Dollar General, among them.

But the market's very behavior will be most important, and whether it prices in the Fed's rate hike without turning violent.

"For me, that's probably the biggest risk. It looks like the growth numbers are lining up for a 2 (percent) handle for the second quarter which looks like plenty. ... Short of a real disaster in markets, I think the Fed is going to have to look through this market thing and not get pushed around by the markets all the time and get scared into not doing anything. I think market reaction in the last couple of days is encouraging, but maybe that means the market doesn't believe them," said Robert Sinche, global strategist at Amherst Pierpont Securities.

Odds of a Fed rate hike were about 30 percent for June on Friday, from just 4 percent the week earlier, according to futures markets. July odds were about 50 percent.

A costumed reveller wearing a mask depicting Munch's famous painting 'The Scream' poses near St Mark's square during the carnival on February 21, 2014 in Venice.
Signs of fear are running rampant through the market
The stock market in the past week was turbulent, but the S&P 500 finished the week slightly higher, with a gain of 0.3 percent to 2,052. The Dow fell slightly, however, ending at 17,500, a decline of 0.2 percent for the week. But on Friday, all major stock market indexes rose, and a rally in tech pushed the Nasdaq 1.2 percent higher. It finished at 4,769, a gain of 1 percent for the week.

The big move came in the Treasury market, where the 10-year yield rose to trade at 1.84 percent late Friday, from 1.70 percent the week earlier. The two-year yield also climbed to 0.88 percent by Friday. The dollar index rose 0.8 percent for the week, with the dollar rising against most currencies.

Markets will watch the dollar's reaction.

"It's going to be a fairly volatile summer," said Daniel Katzive, head of North America foreign exchange strategy at BNP Paribas. He said there could be big moves in the currency market but perhaps not much difference in levels in the next couple of months. "We'll have a lot of choppiness. It's not going to be a low-volatility summer. The levels of the dollar Memorial Day may look very similar to what they look like Labor Day. ... We might not be getting anywhere on net."

Katzive said BNP's base case is that the Fed will not hike this year, or even next, because the economy is not quite strong enough. He said the central bank's rate rise talk could restart the negative feedback loop that took place this year, when a strong dollar leaned on emerging markets currencies, including the Chinese yuan, and commodities prices, creating tight financial conditions and economic weakness.

"I think what's going to happen is the market's going to try to price Fed tightening and see how sustainable that is. We've seen the feedback loop operating over the past six months. The Fed sounds hawkish. The dollar goes up, rates go up and that starts to feed back into the market," he said.

He said the market did manage to take the fourth-quarter rate hike in stride. "We think the data is going to be too mixed, and we think financial conditions won't allow it. But nothing is set in stone. With the Fed, if financial conditions are better and the data is better, then they have a window ... the world is not a predictable place."

Some economists and market pros have cheered the Fed for hiking rates because they see the economy as strong enough, and believe it's time the central bank removes some stimulus. They believe the market reaction does not have to be negative.

"The Fed has to do this," said Tobias Levkovich, Citigroup U.S. equity strategist. "Will the Fed raise rates because the economy is strong, and earnings are going to pick up? That's not bad. ... It's still early in the stage of tightening where you can't say: 'This is going to kill the market.' It's not usually the second or third rate hike that's going to do that."

Levkovich said the market could pull back but he sees that as temporary and added the expected volatility this summer should bring buying opportunities. He said he's watching one indicator that is signaling that stocks could face choppiness. When the S&P stocks are highly correlated, the market usually does better. But currently, he says stocks are just about 20 percent correlated to each other, indicating there could be a rough spot ahead.

"That could suggest some macro dynamic could throw you off. It could be the dollar moves a certain way, or oil throws it off. That would be why we're saying buy on weakness," he said. Levkovich expects the S&P 500 to end the year at 2,150.

"I'm less freaked out by Fed issues other than you might have to position portfolios differently," he said. "When the Fed was raising rates and bond yields were moving up, traditionally defensives don't do well, and more cyclical stocks tend to do better and financials do better," he said. For example this past week, defensive utilities were the worst performers, down 2.4 percent. Tech, helped by a rally in semiconductors, was one of the better-performing sectors, up 1.4 percent, the same as the gains in financials.

"If the U.S. does well, the rest of the world benefits. It may not be that disruptive to the dollar. Bond yields around the world could edge higher too. It's not just that U.S. bond yields go up, it's the differential. ... There was a sense the dollar will go up forever. That was the view six months ago," said Levkovich.

G-7 finance ministers will meet over the weekend, but strategists are not looking for any news from there.

"I think they're just doing the normal dance. They'll talk about terror financing in light of what just happened. They were going to do it anyway," said Sinche. "They don't really have any answer on fiscal stimulus. It's actually pretty depressing. You would think they would have some sort of initiative, pledges."

Repeatedly, central bankers have called for fiscal stimulus programs to nudge the world's slow-growing economy. "It's kind of mind boggling when you think about it. ... You've got close to zero borrowing costs, monetary policy that's tapped out and nobody wants to discuss fiscal stimulus at all," he said.

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« Reply #89 on: May 21, 2016, 04:17:25 PM »

Fed rate hike isn’t all ‘doom and gloom’ for stocks: JPM strategist
Annie Pei
Thursday, 19 May 2016 | 2:18 PM ET
COMMENTSJoin the Discussion

The potential for the Federal Reserve to raise rates in June appears to be spooking the market, but one market strategist says that stocks will likely rise in an environment that will lead the central bank to raise rates.

On Wednesday, the Fed released minutes from the April policy meeting in which it indicated that if the data continue to improve, it could raise its target federal funds rate as early as June. The announcement caused the S&P 500 and the Dow Jones industrial average to slide down into Thursday, showing the anxiety surrounding a possible move by the central bank.

But Gabriela Santos, global market strategist at JPMorgan Asset Management, says that if the economy continues to improve, stocks are set to do well no matter what the Fed does.

"If you just think about the underlying reason why the Fed would be hiking rates, it's because the economy's doing fairly well," she said Wednesday on CNBC's "Trading Nation." "Things are normalizing; as a result that could be a positive thing for earnings, for stocks, for general risk assets. It doesn't have to be doom and gloom."

Read MoreMarket's early reaction to a Fed June rate hike is NO!

Santos is especially bullish on the "cyclical" sectors that do best in an improving economy, such as consumer discretionary, financials and technology.

Currency strategist Boris Schlossberg agrees with Santos' take.

"This is the absolute right time for them to do a rate hike in June before the general election starts, before you have turmoil in the markets," Schlossberg, managing director of FX strategy at BK Asset Management, said Wednesday on CNBC's "Power Lunch."

"So I think what will happen here is you'll have this rate hike in June, and then another pause for six months. And that's probably going to create a much bigger calm than people think."

"Would it help financial stocks right now? Absolutely. Is it going to steep the curve for a bit? Absolutely. But I don't think long-term secular move by the Fed, by any means, this is just a one and done move to satisfy the markets," he said

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« Reply #90 on: May 22, 2016, 05:48:37 AM »

How to make money off the Fed’s next interest rate move

By Mark Hulbert
Published: May 20, 2016 10:01 a.m. ET

Timing of next rate hike makes no difference
Getty Images
Ready for today’s investment challenge? Give a plausible argument for why the stock market should have plunged earlier this week upon learning that the Fed may raise rates at its June meeting.

I seriously doubt you can come up with one; at least none of the economists I have spoken with in recent weeks was able to do so. On the contrary, each told me that the timing of the Fed’s rate increase is irrelevant.

Typical were the remarks of John Graham, a Duke University finance professor: “I am hard pressed to come up with any rational valuation model for equities in which the difference in three or six months in the timing of an increase has a material impact on stocks’ fair value.”

In fact, the only scenario in which the timing of a rate increase would make even a modest difference is one in which rates otherwise stay low forever. But I’m unaware of anyone who seriously entertains such a scenario.

0:00 / 0:00
Think like Buffett: 3 stocks for a volatile market(4:30)
Financial advisor Wally Obermeyer expects more volatility in the market. He's looking to pick up shares of Brookdale Senior Living, Google, and Intel on dips.

And if rates are going to be raised at some point in the coming year or two, the timing of that increase makes surprisingly little difference. I won’t burden this column with the math, but be my guest with your spreadsheet program: Calculate the present value of a stream of future earnings or dividends under different timing assumptions. You’ll find that the results of your calculations are virtually the same regardless of whether rates are increased this June, or September, or December — or even in 2017.

Accordingly, in the immortal words of “Star Trek’s” Mr. Spock: “A difference that makes no difference is not a difference.”

I know that it’s dangerous to believe that we know more than the markets do. But in this case the irrational obsession with the timing of the rate hike can be traced to Wall Street’s need to have something new and interesting to focus on every day. Any responsible econometric model has numerous inputs that don’t change every day, and when one of them does the overall model’s forecast changes only marginally.

In short, such models are B-O-R-I-N-G, while obsessing about the Fed is anything but. The Federal Reserve governors’ regular speeches enable investment advisers to think they are doing real work by endlessly analyzing the governors’ every word. The news media is a co-conspirator in this process. No one stops to ask whether it makes any real difference.

Fortunately, you can make money from the market’s irrationality: Do the opposite of what the market does.

If it appears the Fed will act sooner rather than later, and the market plunges — as it did earlier this week — then think about increasing your equity exposure.

Likewise, if the Fed appears ready to postpone its next rate hike and the market soars, you might want to take some chips off the table

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« Reply #91 on: May 22, 2016, 09:44:12 AM »

Why Deutsche Bank Thinks A Fed Rate Hike Would Unleash A Stock Market Crash
Tyler Durden's pictureSubmitted by Tyler Durden on 05/21/2016 18:01 -0400

China Deutsche Bank Global Economy High Yield Investment Grade Market Crash Monetary Policy Recession recovery

Following this week's FOMC Minutes shows, which violently repriced June rate hike odds from 4% to 30% and July from 20% to 50%, the cries of lenienecy have begun, and nobody is doing so louder than Deutsche Bank which in an overnight credit summary note tries to make it clear that "the market is not ready for a June hike."

Why is Germany's largest bank, whose stock price is trading just barely above 52 weeks lows and level not seen since the financial crisis so worried? Simple: "the hawkish minutes will weigh on risk, bias yields lower, and flatten the curve" for the simple reason that the Fed is so clueless it "seems to be interpreting recent easing in financial conditions as an opportunity to force rate expectations higher." Instead, the Fed is once again confusing cause and effect, and DB says the "ease in financial conditions occurred precisely because of the Fed’s dovish turn earlier this year." Hence why DB is confident a hawkish turn will push markets right back where they were in December and January, prior to the February Shanghai Accord.

Of course, we already gave this explanation last fall, just before the Fed's December rate hike. It's time to give it again, and amusingly, DB agrees because as Dominic Konstam writes, "If you think you’ve seen this movie before it’s because you have."

Alas, it is indeed deja vu all over again:

Like during 2015, the Fed appears bent on pushing rate expectations higher, and the operative question is whether the more hawkish turn to Fed rhetoric will up-end risk and tighten financial conditions to the extent that a rate hike is imprudent if not impossible given the latent fault lines in the global economy.
Last year the Fed attempted to prepare the market for a September hike at the June meeting with a decidedly negative result, and then had another go in October for the December meeting with the result that markets tolerated December lift-off before coming apart early in 2016. The operative question is whether markets are sufficiently calm for the Fed to use the June 2016 meeting to pave the way for a July hike.
And this is why Deutsche Thinks that just like in July/August and January/February, as the market starts to earnestly pricing in a June/July rate hike, everything is about to plunge once more:

We think the answer is no because the issue is not just the timing of a single hike toward some static goal for rate level in 2017. What is at issue is the existence of some Shanghai “accord” whereby global policymakers have agreed explicitly or implicitly that excessive dollar strength is counterproductive and that policymakers should shift their focus to domestic demand and structural reform within an environment of dollar stability, at least through the next G20 in early autumn. If there is no accord then divergent monetary policy could drive the dollar stronger, restarting among other things speculation against CNH versus the dollar rather than CNY versus the entire CNY basket with now very familiar results: reserve loss exacerbating higher Fed expectations for US rates, and downward pressure on risk assets with a non-trivial chance that China might devalue and, worse yet, do so in a lumpy fashion.
Or just as we said on Thursday, it will be all up to China again to stop the Fed's rate hike:

 zerohedge ‎@zerohedge
Looks like its up to China again to derail the Fed's June rate hike plans
2:44 AM - 20 May 2016
  29 29 Retweets   47 47 likes
Still, assuming the Fed ignores Deutsche Bank's laments for a reprieve - because as we saw in February, DB may well be the first bank to go under should the market be swept by another global round of risk off - this is how a rate hike could take place.

The risk is that the Fed might use the June meeting to pre-announce a press conference around the July meeting, or in some other way “pre-commit” to a July hike. The issue is that with still benign wage pressure and inflation, premature and more aggressive Fed hikes would drive real yields higher for the wrong reason. This is the policy error scenario. Yellen’s timeout drove real yields roughly 70 bp lower from the late 2015 highs, but levels have already more than doubled from the lows by virtue of little more than “why not raise rates for the sake of it” rhetoric. What Fed officials seem to be suggesting is that they might be growing increasingly nervous about low real rates fuelling asset classes like equities, investment grade credit, and gold even though other risky assets such as high yield and emerging markets do not perform  well absent higher breakevens. The risk case is then that an overly aggressive Fed would push real yields up and breakevens down, thus undermining risk assets generally.
But which risk asset is at most, pardon the pun, at risk?

One issue is precisely what risk asset valuations are telling us. If we consider risk asset valuations as a function of Fed-related variables – say, breakevens and real yields –market valuations of HY, IG, and EM are more or less consistent with “fair” levels given these variables and their historical relationship with asset valuations. Note that DXY appears too high from this perspective, while oil appears too low.

The outlier appears to be SPX, where valuations appear excessive given the breakeven/real yield framework.
And while DB's points are mostly valid, its agenda becomes fully transparent with the next sentence:

This is not to say that the Fed can never raise rates because of negative impact on financial variables, but it is far from clear to us that the Fed should be hiking against financial market froth when many asset classes have only partially recovered from losses last year.
Actually that's exactly what it says (ignoring the pleas by all those hundreds of millions of elderly retirees whose only source of income used to be interest income and who have been left for dead under a central bank regime which only caters to its commercial bank owners) and the longer the world eases financial conditions, either via QE or ZIRP or NIRP, the more impossible it will be for the Fed to ever hike; in fact the next big move will be just the one Deutsche Bank has been begging for all along - unleashing helicopter money.

In fact, we are confused by Konstam's note: if indeed DB wants (and needs) a monetary paradrop (recall "According To Deutsche Bank, The "Worst Kind Of Recession" May Have Already Started"), then a policy error is precisely what the Fed should engage in.  Not only will it send markets into a long, long overdue tailspin, one from which the only recovery will be the bubble to end all bubbles, the end of monetarism as we know it courtesy of the quite literal money paradrop, but reset not just the US economy but that of the entire world, in the process wiping out tens of trillions in unrepayable debt, and allowing the system the much needed reboot we have been urging ever since our start in 2009.

We are confident that just like everything else predicted on these pages, it is only a matter of time now before this final outcome is also realized

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« Reply #92 on: May 23, 2016, 06:01:19 AM »

US close to passing test for June rate rise, Fed official says
Sam Fleming in Washington
21 Mins Ago
Financial Times
COMMENTSStart the Discussion
Eric Rosengren, president and chief executive officer of the Federal Reserve Bank of Boston
Sukree Sukplang | Reuters
Eric Rosengren, president and chief executive officer of the Federal Reserve Bank of Boston
The US is on the verge of meeting most of the economic conditions the Federal Reserve has set to increase interest rates next month, according to a member of the rate-setting Federal Open Market Committee.

Eric Rosengren, the president of the Federal Reserve Bank of Boston, told the Financial Times he was getting ready to back tighter monetary policy after financial and economic indicators swung in a positive direction after the Fed’s policy meeting in March.

Until last week markets were putting extremely low odds on a summer rate increase, in part because of the dovish tone of Fed chair Janet Yellen’s last speech two months ago. That picture was transformed on Wednesday, as the Fed minutes from its April rate-setting meeting suggested it was preparing the ground for a second interest rate increase following the quarter point rise in December.

“I want to be sensitive to how the data comes in, but I would say that most of the conditions that were laid out in the minutes, as of right now, seem to be . . . on the verge of broadly being met,” said Mr Rosengren, who has a vote on rates this year as part of the regular rotation of regional Fed presidents on the FOMC.

To justify a move at its next policy meeting in June, the Fed set itself three tests: to see additional signs of a rebound in the economy in the second quarter, further strengthening in the jobs market and for inflation to carry on towards the Fed’s 2 per cent goal. While policymakers are divided over whether these conditions will all be met by next month, Mr Rosengren said he saw the preconditions for a June rise falling into place.

Mr Rosengren was one of the Fed doves last year but has recently become more bullish on the outlook.

His stance chimes with the findings of the latest FT survey of 53 leading economists which found that more than half — 51 per cent — expected the Fed to tighten monetary policy at one of its next two meetings. This was in stark contrast to market views as recently as the start of the month when concern over lacklustre global growth and choppy financial markets seemingly stayed the US central bank’s hand until 2017.

Recently markets have been more buoyant as oil prices rose, the dollar eased and US economic data gained strength.

Analysing the Fed’s three tests for a June move, Mr Rosengren said the central bank had set a “relatively low threshold” for improvement on the growth front given first-quarter gross domestic product expansion was at an annualised rate of just 0.5 per cent. While job growth in April slowed from the roughly 200,000 monthly average in the first quarter, hiring was still “well above” what was needed for a gradual tightening of the labour market, he added.

Mr Rosengren said the US was “making progress on getting to inflation at 2 per cent”, given the higher oil price, the depreciation of the dollar over the past two months, and the firming of the core personal consumption expenditures measure of inflation to a year-on-year rate of 1.6 per cent.

“The reason I am more confident is we are getting better data,” he said.

The June 14-15 meeting of the FOMC takes place just a week before Britain’s referendum on its EU membership, but the vote should not stand in the way of US monetary policy changes unless it triggered a significant bout of market instability, Mr Rosengren said.

“Votes by themselves shouldn’t be a reason for altering monetary policy,” he said. “If we were experiencing significant changes in financial conditions that made us significantly alter the outlook going forward, that would be something that we should take into account.”

Mr Rosengren said demands in previous years for ultra-aggressive monetary stimulus had been vindicated as the US economy is springing forward with “a little more alacrity” than its trading partners. Now the picture is changing, however.

“Because we are closer to full employment and because we are closer to our inflation target I am more confident now that a more normalised situation makes sense,” he said.

More from The Financial Times:

Data suggest fire onboard EgyptAir flight
Expectations grow over Fed rate rise
US bank branches defy transactions slump

Fencing match
Week ahead will tell whether markets challenge Fed
A cyclist passes the Federal Reserve headquarters in Washington.
Cramer: Rate hike is overkill—it helps no one

The markets have been burnt by hawkish signalling from the Fed before — which partly explains why traders have been sceptical that the central bank will deliver anywhere near as much tightening as its policymakers' March median forecasts suggested.

Going into last week investors were putting odds of just 4 per cent on a rate rise in June. Then came the Fed's April minutes, and a strong signal that an increase will be an option at the June 14-15 rate-setting meeting.

"The reason they should believe this time is different is that the economic conditions are changing over this period," Mr Rosengren said, referring to the spell since the Fed's March meeting.

Financial markets have improved markedly since March, while the US consumer, which drives two-thirds of growth, has been showing greater verve, he explained. Private sector economists' consumption forecasts for the second quarter were in the range of 3 per cent to 3.5 per cent, which points to broader growth of about 2 per cent, he argued.

"Stock markets globally have improved quite significantly. The data has been coming in better and not only in the United States but in many other parts of the world. Some of the headwinds we thought might be a significant problem as recently as March seem to be a little bit less of a significant problem as we go into June," Mr Rosengren said.

With the fed funds rate still at roughly 35 basis points, "that is pretty low, given we are pretty close to full employment", he said, while cautioning that he was not prejudging economic data that will emerge between now and the June meeting.

Mr Rosengren's arguments for gradual monetary tightening are not confined to the labour market and inflation. He has been outspoken in warning about the possible side-effects from ultra-low interest rates in the property sector.

In Boston, as in many other big cities in the north-east and elsewhere, the main manifestation has been evident in rising commercial real estate prices. One way of reining in excesses in that sector is via regulatory tools, and the Fed last year issued guidance aimed at anchoring prudent lending standards in the industry.

But with non-bank financial institutions such as pension funds emerging as important drivers in the sector, the Fed's supervisory weapons may not go far enough. Mr Rosengren said last November that if trends in the commercial property world continued unabated it could become an argument for a somewhat quicker pace of interest-rate increases by the Fed.

"I think we should continue to ask ourselves are we doing what we need to do to make sure that commercial real estate doesn't grow to a point where it becomes a financial stability concern," he said

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« Reply #93 on: May 23, 2016, 05:45:44 PM »

财经  2016年05月23日
威廉斯:Fed今年適合升息 不受大选影响

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« Reply #94 on: May 23, 2016, 05:49:34 PM »

财经  2016年05月23日

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« Reply #95 on: May 23, 2016, 08:11:06 PM »

Fed's Williams: U.S. Election Won't Stop Rate Hikes
Published May 22, 2016 The Fed  FOXBusiness

The heated race for the White House won't stop the Federal Reserve from raising interest rates this year.

In an interview on Fox's Sunday Morning Futures with Maria Bartiromo, John Williams, president of the Federal Reserve Bank of San Francisco, said "We've proven over and over again that we can act in presidential election years." Williams added, "We are about as apolitical as you can imagine just focused on our goals."

More From
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The remarks from Williams continue a steady stream of Fed speak this month in which multiple FOMC officials have indicted policymakers will hike rates this year.

Members of the Federal Reserve will meet next in a two-day meeting on June 14-15. "In my view it will be appropriate to start raising rates again later this year," said Williams, while noting that policymakers will continue to scrutinize the economic data ahead of the planned meetings.

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« Reply #96 on: May 24, 2016, 05:54:12 AM »

Sunday, May 22, 2016
This Is Not A Drill. This Is The Real Thing.
The June FOMC meeting is live. That message came through loud and clear in the minutes, and was subsequently confirmed by New York Federal Reserve President William Dudley. Last week, via Reuters:

"We are on track to satisfy a lot of the conditions" for a rate increase, Dudley said. He added, though, that a key factor arguing for the Fed biding its time a little was the potential for market turmoil around Britain’s vote in late June about whether to leave the European Union...

..."If I am convinced that my own forecast is sort of on track, then I think a tightening in the summer, the June-July time frame is a reasonable expectation," said Dudley, a permanent voting member of the Fed's rate-setting committee.

Boston Federal Reserve President Eric Rosengren, the canary in the coal mine that was long ago alerting markets that they were underestimating June, subsequently gave a strong nod to June in his interview with Sam Fleming of the Financial Times:

We are still a month away from the actual meeting. We are going to get another employment rate in early June. We are going to get a second retail sales report. So I want to be sensitive to how the data comes in, but I would say that most of the conditions that were laid out in the minutes as of right now seem to be . . . on the verge of broadly being met...

Clearly, the Fed will be debating a rate hike at the next FOMC meeting. Will they or won't they? To answer that question, I need to begin with my main takeaways from the minutes:

1.) The Fed broadly agrees that the economic recovery remains intact. Overall there is broad agreement at the Fed that outside of manufacturing (for both domestic and external reasons), economic activity has moderated but remains near or somewhat below their estimates of potential growth and hence is sufficient to drive further improvement in labor markets. The weak first quarter numbers were largely statistical noise attributable to faulty seasonal adjustment mechanisms. Data since the April meeting generally supports this story. The economy is not falling over a cliff, recession is not likely, nothing to see here, folks.

2.) A contingent, however, disagreed with the benign scenario:

 However, some participants were concerned that transitory factors may not fully explain the softness in consumer spending or the broad-based declines in business investment in recent months. They saw a risk that a more persistent slowdown in economic growth might be under way, which could hinder further improvement in labor market conditions.

This group will want fairly strong evidence that the first quarter was an anomaly before the sign off on the next rate hike.

3.) There was broad agreement of the obvious - global and financial market threats waned since the previous meeting. The Fed recognized that their hesitation to hike rates helped firm markets. It's important that they recognize that if the economy weathers a bout of financial market turbulence, it is often with the aid of easier Fed policy. Some Fed speakers appeared not to recognize this relationship earlier this year.

4.) Still, the risks are either balanced or to the downside. Apparently, none of the participants saw risks weighed to the upside.  While some participants believe the threats had lessened sufficiently to justify a balanced outlook:

Several FOMC participants judged that the risks to the economic outlook were now roughly balanced.

the view was not widely shared:

However, many others indicated that they continued to see downside risks to the outlook either because of concerns that the recent slowdown in domestic spending might persist or because of remaining concerns about the global economic and financial outlook. Some participants noted that global financial markets could be sensitive to the upcoming British referendum on membership in the European Union or to unanticipated developments associated with China's management of its exchange rate.

It seems reasonable that this large group will need to see further diminishment of downside risks to justify a hike in June. Brexit doesn't derail a June hike unless it looks to be negatively impacting financial markets.

5.) The question of full employment deeply divides the Fed. Who wins this debate is critical to defining the policy path going forward. One group thinks the economy is not at full employment:

Many participants judged that labor market conditions had reached or were quite close to those consistent with their interpretation of the Committee's objective of maximum employment. Several of them reported that businesses in their Districts had seen a pickup in wages, shortages of workers in selected occupations, or pressures to retain or train workers for hard-to-fill jobs.

But others saw room for further improvement:

Many other participants continued to see scope for reducing labor market slack as labor demand continued to expand.

The Fed's plan had been to let the economy run hot enough for long enough to eliminate underemployment. One sizable camp within the Fed thinks this largely been accomplished. This is the group that is itching for more hikes earlier. This is a place where Federal Reserve Chair Janet Yellen should have an opinion and be willing to guide on that opinion. In the past, she has sided with the "still underemployment" camp.

6.) The Fed is also split on the inflation outlook but most believe inflation is set to trend toward target. A nontrivial contingent saw downside risks to the inflation outlook due to soft inflation expectations:

Several commented that the stronger labor market still appeared to be exerting little upward pressure on wage or price inflation. Moreover, several continued to see important downside risks to inflation in light of the still-low readings on market-based measures of inflation compensation and the slippage in the past couple of years in some survey measures of expected longer-run inflation.

But the majority were either neutral or dismissive of the signal from expectations:

However, for many other participants, the recent developments provided greater confidence that inflation would rise to 2 percent over the medium term.

7.) June is on the table. I have long warned that market participants were underestimating the odds of a rate hike in June. This came across loud and clear in the minutes:

Participants agreed that their ongoing assessments of the data and other incoming information, as well as the implications for the outlook, would determine the timing and pace of future adjustments to the stance of monetary policy. Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee's 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June.

Consider that the Fed's modus operandi is to delay an expected policy change for two meetings in the face of market turmoil. Hence given calmer financial markets, June could not be so easily dismissed. But it was  not just the financial markets that stayed the Fed's hand. It was also softer Q1 data. As of April, participants had not concluded that they would see what they were looking for to justify a rate hike.

 Participants expressed a range of views about the likelihood that incoming information would make it appropriate to adjust the stance of policy at the time of the next meeting. Several participants were concerned that the incoming information might not provide sufficiently clear signals to determine by mid-June whether an increase in the target range for the federal funds rate would be warranted. Some participants expressed more confidence that incoming data would prove broadly consistent with economic conditions that would make an increase in the target range in June appropriate.

Moreover, these are participants, not committee members. The actual voters members appeared less committed to June, saying only:

Regarding the possibility of adjustments in the stance of policy at the next meeting, members generally judged it appropriate to leave their policy options open and maintain the flexibility to make this decision based on how the incoming data and developments shaped their outlook for the labor market and inflation as well as their evolving assessments of the balance of risks around that outlook.

Here are my thoughts, assuming of course the data and the financial markets hold up over the next few weeks:

A.) There is a rate hike likely in the near-ish future. There seems to be broad agreement that, at a minimum, the pace of activity remains sufficient to bring the Fed's goals - both maximum employment and price stability - closer into view. Close enough that most voters will soon think another rate hike is appropriate. The doves can't push it off forever.

B.) The Fed will consider June, and there is likely some support among the voting members for a June hike. But ultimately, I think most will want a more complete picture of the second quarter before hiking rates. Also, the contingent that remains less convinced by the inflation outlook will press for more time. Moreover, they will also need broad agreement that the risks to the outlook are at least balanced. It would indeed be silly to plow forward with rate hikes if most members thought the risks were still weighted to the downside, even if the data were broadly consistent with the Fed's forecast. That agreement of balanced risks just might not be there by June. 

C.) Fed doves might, however, need to strike a compromise to hold the line on June and avoid more than one or two dissents. That compromise could be a strong signal about the July meeting via the statement, the press conference, or, most likely, both. A July hike would also serve to end the idea that the Fed can't hike rates without a press conference.

D.) The reason compromise might be necessary is the possibility of a fairly stark divide between voting members. Assume Esther George, Eric Rosengren, and James Bullard will push for a rate hike in June. Furthermore, assume that Lael Brainard opposes a rate hike, and has sufficient leverage to pull Dan Tarullo and William Dudley to her side. Janet Yellen might prefer to negotiate a compromise rather than face the prospect of multiple dissents from either camp.

E.) Of all the divisive points above, I think the most important is the debate over the level of full employment. The ability of the doves to slow the pace of subsequent rate hikes will hinge on their willingness to push for below NAIRU unemployment to alleviate underemployment. If the doves maintain the upper hand, the path of subsequent rate hikes will be very, very shallow. I cannot emphasize enough that this is a debate in which Janet Yellen has the opportunity to take leadership that fundamentally defines her preferred rate path going forward. Does she stick with the bottom dots?

Bottom Line: This is not a drill. This meeting is the real thing - an undoubtedly lively debate that could end with a rate hike. I think we narrowly avoid a rate hike, but at the cost of moving forward the next hike to the  July meeting

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« Reply #97 on: May 24, 2016, 07:18:12 AM »

"The Fed Is About To Make A Massive Mistake" Saxobank's Jakobsen Warns
Tyler Durden's pictureSubmitted by Tyler Durden on 05/23/2016 17:00 -0400

Federal Reserve Saxo Bank William Dudley

Steen Jakobsen, chief economist and CIO of Saxo Bank, says the US Federal Reserve is on the verge of making a mistake about its projected rate hikes. The Fed has given itself the option of hiking interest rates at its June meeting; but Jakobsen says he is sceptical about the proposals, arguing that the Fed is taking the recent improvement in US economic data as an uptick in overall momentum. Jakobsen says the economy is still performing significantly below its potential, but thinks the Fed wants to hike interest rates now so it can lower them at a later date.




Surprises are expectations which are not met. CESIUSD is the Citi Economic Surprise Index which measures data surprises relative to market expectations.
According to Bloomberg, FOMC vice-Chairman William Dudley said Thursday:
“Data releases that are close to our expectations have little additional impact on the forecast, while data releases that deviate significantly from our expectations can lead to more         significant revisions of the forecast,” adding that "It is, therefore, important for market participants and households to be able to follow the data along with the FOMC and to understand how we are likely to interpret and react to incoming data."
Ok, so actually CESIUSD Index is a perfect measurement of Federal Reserve from here out. The problem?
CESIUSD – the Surprise Index is almost perfectly mean-reverting around zero. This is an issue because right now… it’s at a low.. meaning even without doing great, the US economy has a very good chance of improving relative to expectations……!!!!! I.e.: Not to true picture of overall economy but vis-à-vis present situation…..

Source: Bloomberg
Bloomberg has its own similar index, the ECSURPUS – it does not look very different.

Source: Bloomberg   
The “positive” being Atlanta Fed GDPNow forecast which has increased. But it often comes down hard as a quarter grows old (look at March drop for Q1).
Atlanta Fed GDPnow

Source: Bloomberg
Finally, Fed NYnow cast is less “impressive so far..”
Fed NY nowcast

I still think the Fed is about to make a massive mistake taking mean-reverting improving data as a precursor for net change in overall momentum – while what is really happening is that the US economy is improving from recession-bound growth (and productivity) to less than escape velocity.
I firmly believe the Fed’s hawkish tilt will be almost as short as the July/August 2015 announced hike in September 2015.
Fading the Fed is still overall the game, but as above, indicates there is a risk that the Fed will be desperate to continue normalization, making June a likely date for a July hike.

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« Reply #98 on: May 25, 2016, 02:10:40 PM »


US Federal Reserve Expected to Increase Interest Rate
Dan Andries | Kristen Thometz | May 24, 2016 5:44 pm
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The financial markets were feeling a bit giddy Tuesday as better-than-expected data show the U.S. economy might be improving faster than anticipated. Among other things, new housing sales shot up in April and the dollar is gaining strength.

These positive signs come on the heels of the recently released minutes from the Federal Reserve meeting in April that show the Fed could raise its benchmark interest rate for the second time in six months at its next meeting in June.

Economist Diane Swonk, founder of DS Economics, thinks there’s more than a 50-percent chance that an interest rate hike will come during the June meeting. The last time the Federal Reserve increased interest rates was in December 2015–and that was by a quarter point.

“What we’re looking at is another quarter point increase,” Swonk said. “The Fed has been waiting patiently to see when they can move again. The important context here is that the Fed is looking to ease up on the gas rather than hit the brakes.”

Meaning, the Federal Reserve feels confident that the conditions are right to raise rates.

“The Fed has a checklist and they’ve sort of met their checklist now,” Swonk said. “The economy looks like it’s reaccelerating after a first quarter lull. It looks like consumers are doing OK, and the housing market in particular is starting to show some signs of real life which is something they want because that has sustainability [and] traction to it.”

Though the economy is improving, the Fed is “still treading as if we’re on thin ice,” she said. “We’re still coming off of a very low base, and the economy still has a lot of healing to do from the Great Recession, particularly individuals regaining ground lost in terms of their living standards.”

Individuals, though, could benefit from a rate hike.

“I think that it’s really important to understand that access to credit cards, access to mortgages—things that were very difficult during the crisis and frankly for many years now—are now starting to pivot,” Swonk said. “Even as rates go up, consumers may find they have more access to credit, it’s only slightly more expensive. On the flip side of it, savers get a little bit more in their saving, although, not much. We’re still talking about extremely low rates.”

Uncertainty in global markets and their reactions to a rate hike could impact the U.S. economy.

“The Federal Reserve, whether they like it or not, they’re the central bank to the world. And many emerging markets, particularly in Latin America, Asia, South Africa—all those economies, they face a lot of external pressure when the Fed starts to raise rates,” Swonk said. “And the fear is that if things got unstable enough abroad, it could come back and haunt us in our own backyard. … We saw an example of that last August when China surprised and imploded, and we saw that effect our financial markets.”

While the Federal Reserve can’t discount the global economy, it must prioritize the U.S., which is why it waited until now for another rate hike. According to Swonk, the Federal Reserve hopes this rate hike will have a very little impact on the U.S. economy.

“The hope is that they’re able to do this because it’s really such a negligible amount that we weather it, and we don’t trigger too many spillover effects [and] that these emerging markets have had time to prepare and whatever’s going to happen abroad is already happening,” she said. “It won’t make it all that much worse, and that our own economy will be able to weather it.”

The discussion continues on “Chicago Tonight.” Joining host Eddie Arruza to talk about the upcoming meeting and anticipated rate hike are Edward Stuart, professor emeritus of economics, Northeastern Illinois University; and Robert Stein, founder of Astor Asset Management.

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« Reply #99 on: May 25, 2016, 08:02:23 PM »

St Louis Fed Pres James Bullard says June rate hike not set in stone, but labor data favorable
Leslie Shaffer   | @LeslieShaffer1
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A U.S. Federal Reserve rate hike in June or July wasn't set in stone, but labor data suggested it was time to pull the trigger, St. Louis Fed President James Bullard told CNBC.

"There's no reason to prejudge June," Bullard said, adding that the Federal Open Markets Committee would look at the data and decide then.


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Muddying the waters on the timing of the move, Bullard noted that there was no reason the Fed must hold a press conference in conjunction with a rate hike. A press conference is scheduled to follow the June 14-15 meeting, but one is not scheduled after the July 26-27 meeting.

"We can wait until we get to the meeting, see what the latest data says, and try to make a good decision there. I think on the issue of press conferences, we have made many moves over the years without press conferences," he said.

Storm on horizon
Strong Treasury auction could be signaling something darker on horizon
"So I think you can make a move without press conferences in this circumstance. I think for that first move, you know the one we did in December, there you probably wanted to have a press conference around that because that was our first move. Whether you have to do that for every single move, I think it is questionable."

For Bullard, labor data was sending a clear signal.

"If you just took your signal from [labor market data], we'd definitely move," he said, noting labor was "at or beyond" full employment, with the number of unemployed persons per job opening lower than during the previous expansion.

"I think we are at or beyond full employment in the U.S., so in the labour market side, that's probably the strongest argument for going ahead and making a move," Bullard said.

But he added that other data were not as strong, with tracking estimates for gross domestic product (GDP) growth this quarter at around 1.6 percent, below the 2 percent trend growth expected.

The Fed kept its target overnight interest rate in a range of 0.25 percent to 0.50 percent at its April meeting, but the meeting's minutes specifically mentioned June as a time when it could hike rates. The Fed hiked rates in December for the first time in nearly a decade.

One thing that, unexpectedly, may not factor in to the Fed's decision-making: The U.S. presidential election.

"The Fed has moved during political cycles in the past," Bullard said, noting that the central bank started a tightening cycle during the 2004 presidential election year.

"Monetary policy is largely independent of the political process. And one of the things I think is you can't win an election by talking about whether the Fed should move right or move left," he said.

Additionally, markets may be fixated on whether the U.K. would vote to leave the European Union (EU), an event dubbed the "Brexit," and if that would throw a speed bump onto the Fed's hiking path, but Bullard said he did not consider it "quite the global financial market event that some are saying," although he noted his view could be "an outlier."

"This is an important strategic decision for the U.K. It's also important for the continent. But the truth is, this is a trade agreement, this is a negotiated situation," he said.

"Even if they decide to get out of the EU, nothing will change on the next day. They will go for two more years. They would open up negotiations. Negotiations would probably drag on even longer than that. So this would be a slow kind of change over many years if they decided to leave."

When it comes to speculation that U.S. monetary policy may follow other major global central banks down the path of negative interest rates, Bullard said he did not consider it likely and was somewhat critical of the concept.

"Negative rates are a tax on the institutions that face short-term interest rates," he said. "When there's a tax, somebody has to pay the tax. So either corporate profits have to fall or they have to raise rates on borrowers or they have to cut rates for depositors.

The Federal Reserve building
Expect 'market dependent' Fed to hike in September: Expert
"But somebody has to pay, one way or another, to pay the tax and none of those things sound very expansionary. I think maybe there are some conceptual problems with negative rates."

Other Fed officials also have prepped markets for a likely interest rate increase sooner rather than later.

New York Fed President William Dudley said last week that the Fed could hike in June or July, and some market commentators have now gravitated to July as the more likely of the two. Market expectations for a June hike jumped on May 18 after the Fed's April minutes were release and have stayed above 30 percent since then, according to CME's FedWatch tool.

Expectations for a July hike rose from 38 percent on May 18 to more than 60 percent Monday.

Speaking on Monday, Philadelphia Fed President Patrick Harker said the central bank should hike interest rates at a mid-June policy meeting unless data before then showed the U.S. economy was falling off its positive track.

"If the data comes in and it's not consistent with my view of the strength in the economy, then I would pause. But otherwise I think a June rate increase is appropriate," Harker told reporters.

"But again, it does depend on what that data looks like," he said, citing employment and inflation reports that are expected before the June policy meeting.

—Evelyn Cheng and Patti Domm contributed to this report