15 Wednesday Jun 2016
Posted | June 15, 2016 2:37:47 | Economics
I was a bit early or CME Fedwatch a little late on rate hike odds as discussed in my previous post FOMC Median Fed Projection Still Two Hikes – Market Laughs.
The odds of a hike this year just crashed. The market even places small odds the next move will be a cut.
CME Fedwatch now has this update.
I suspect I was looking at odds before Yellen started yapping.
Mike “Mish” Shedlock
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“The odds of a hike this year just crashed. The market even places small odds the next move will be a cut.”
Too bad Adam Price is a vampire and posts only in the overnight.
Always enjoy his comments that FOMC will plow through 8 quarter point hikes or so by end of 2017 … and 10yr yield hitting 3.25% “very soon” …
Well, have something to look forward to tomorrow morning …
Janet Yellen is a fickle old woman. Janet is uncertain. Frequent transient ischemic brain blackouts have killed off too many nerve cells for her to function normally.
The odds of a July hike dropped to 12%,December no 50%. Ye)len shows her wishy-washy side… she doesn’t know , then DOW drops 80 points into close. Same ol’, same ol’.
Interesting anomaly at the end there: odds of 2 rate hikes = 0%, odds of 3 hikes = 1.6%.
The Italian term “Opera Buffa” perfectly describes this seemingly endless sh*tshow.
The “market” no longer exists, trying to devine “odds” from this is a waste of time.
If Hilary wins, she will humiliate women like Obama has set racial relations back decades. Yellen will continue to f@ck up the bond market. Most people trading bonds will lose their jobs and their careers. If rates stay low, all pensions will be destroyed and the government will go bankrupt like Athens, Greece. If rates get normalized, all the people who went out and borrowed instead of saving will have to pay substantially higher rates — meaning their discretionary income (left over after paying interest) will plummet.
Either way, only a moron would suggest that a few more months or a few more years of this stupidity would fix the economy.
When Trump wins the presidency, and Hilary goes to prison for treason, Trump has already said he is going to fire Janet Yellen. Yellen was the stooge dumb enough to take the fall for Bernanke’s stupid policy failures, and its time she fall on her sword and get on with it.
Trump makes all sorts of bizarre statements in public, but its a show (even he says so). Behind the scenes he generally picks smart people. Whether he can find someone both wiling and able to clean up Bernanke’s mess, that is the $100 trillion question.
But anyone expecting to discern anything meaningful from a “market” that merely reflects Yellen’s souring mood (it has nothing to do with the economy)…. those people will lose their money one way or the other. Inflation or default.
Meanwhile, I have yet to hear any intelligent comment from any Fed economist about how health care COSTS (not “insurance”) can climb 30%+ every year and not destroy the economy faster than Janet Yellen.
Puerto Rico was the first, Chicago waiting in the wings, Central pension fund circus – court rejects cuts in dispersions… and nobody is paying much attention.
IMO, there are two “pension” problems in the US (actually the whole G7).
Government employees who barely do any work at all, work short hours, and retire after 20 years — they cannot possibly expect taxpayers to make good on public union fantasies. Well, they can expect and judges can make rulings that benefit themselves (as public employees)… but that doesn’t mean the DPW workers are going to get $120K per year in retirement while taxpayers are expected to retire on half as much. This isn’t a legal issue, this is simply not possible no matter what the law thinks.
Separate issue, people do get old and they are going to scale back the work they *can* do. The only way for that to happen is with increased savings. The past 30 years have been highlighted by essentially ZERO savings rate (versus 7-8% savings for earlier generations).
Baby boomers (as a group) saved practically nothing, so that is what they deserve to get. But even those that tried to do the right thing and save some money for retirement are now being punished and robbed by a horrible old lady pretending to know something about economics.
I think every baby boomer in the US has a solid legal case to sue Yellen for grand theft. Stealing money from savers to prop up bad banks is simply not part of the Fed’s mandate.
And yes, go after that pompous ass Bernanke (and Greenspan) too.
Since you seem to think Trump has all the solutions, who will he pick to run the Fed and what will they do to get out of this mess? You already said that they are screwed if they leave rates alone and screwed if they raise them, so what is the third option?
Clinton’s solution will be more war. She works for Goldman Sachs right now and will keep working for them after she’s sworn in.
http://www.artbible.info/images/titiaan_cijnspenning_grt.jpg
@Billy Walrus — If you find yourself at the bottom of a deep hole, stop digging. Simply getting rid of an idiot, and leaving the FOMC chair unfilled would be a dramatic improvement on things.
Second, the biggest mistake Bernanke / Yellen made was arrogance and vanity. They told the world they could solve a problem (that Bernanke created), and the fact (as dozens of people have pointed out) is that we have a debt problem and a regulatory problem.
Only an egotistical moron like Bernanke would look at the explosion of debt in 2003-2008 and conclude the world needed even more debt. Don’t tell me that guy has the brains to get out of the rain. ANY BLUE COLLAR WORKER WOULD HAVE DONE BETTER.
And the explosion in regulatory burdens and government costs negated cheap credit 50x over. You can now get a mortgage at 3.5%, but more than double your “savings” is going to prop up ObamaCare.
Hate the banksters? Tell me why you want to regulate the crap out of mom and pop shops in order to “punish” bankers? Tell me how it hurts Lloyd Blankfein or Jamie Dimon if you make RIA’s fill out 3-4x as many forms. How do those forms even help customers? They don’t — they help lawyers and regulators.
When that idiot Bernanke decided to lower rates in 2008 (to solve an excessive debt problem he himself created) — the Bush and Obama regimes added enough regulatory stupidity to cancel out the rate cuts several times over.
While we are on the subject of stupid regulations, please explain why Osama Bin Laden blows up the World Trade Center, and the response from Washington DC is to create yet another bureaucracy (the TSA) to take away YOUR nail clippers and shampoo?
How does taking away your nail clippers and shampoo stop terrorism? It doesn’t.
Giant banks that are above the law will not improve their ethics if you punish mom and pop stores.
And no amount of “free” health insurance for illegal immigrants is going to bring YOUR health costs under control
***** DUH!!!! ****
@greg Yes, we know what Clinton’s (and Goldman’s) solution is. You never answered my question about Trump’s solution.
@greg I am not disagreeing with your analysis above on regulatory issues etc. The Fed solution is to leave the chair empty? A nice option I agree but not one Trump is going to make.
@Billy Walrus — you seem to think it would be difficult to replace Yellen. I am saying Trump could go pick any blue collar worker off the street. Tell him / her to just normalize interest rates and then relax. Do absolutely nothing.
If Trump put in Paul Volcker or whomever you think is a monetary “genius” — there is nothing the Fed can or should do. More debt won’t fix anything.
Trump doesn’t tell me what his solution is. And if you read my other comments on Trump, I think some of his international trade ideas are good in concept but impractical in reality.
We don’t get to pick a great President this time — he / she is not running. We have a treasonous liar who favors political insiders versus a real estate mogul with weird hair. We have to play the hand we have been dealt, not what we wish we got.
Hilary will destroy feminism like Obama destroyed race relations. She will sell the White House to Goldman and/or Saudi Arabia. She will prosecute “nobodies” like Edward Snowden while making stupid excuses for her own cabinet. She will use the IRS to go after her political enemies. And based on her failed foreign policy efforts all over the middle east, asia and Russia — she will get the US into even more unnecessary wars.
Trump will brag on TV a lot. He is the greatest blah blah, constructing the number one building in who cares what city. But underneath all that bravado and showmanship, the guy has managed to build a real estate empire.
Do you want a crook and traitor that will destroy the US and make wealth inequality even worse, or a blow hard that will build some weird buildings?
Between Trump, Sanders and Hillary — Hillary is the most lying evil one of the bunch. The other two have some weird ideas that probably can’t get implemented, plus they are entertaining.
And if you believe in democracy, well Sanders won the popular vote. Hillary got the party apparitchnik with bribes.
So yeah, if Trump spends the next four years bragging about how great he is (and doesn’t mess up more stuff) — he is the better choice.
The market is in quarantine. Rick Santelli.
This isnt a question of “odds” but credibility. Everyone has to buy something so if the Fed says “we will never buy US dollars” that explicitly states anything based in or backed by US dollars is worthless.
Silver at 30$ US might be sufficient to blow up a trillion in notional dollars forcing someone to come up with actual cash for collateral.
“Liars Poker” is a great book…absolutely recommend it. Iceland defaulted on 700 billion in debt…which you would think make folks wonder how Iceland could amass that much debt to begin with. Nay, verrily…Puerto Rico has just defaulted on 70 billion. And what happens in Orlando? What are the odds indeed.
So the “default” option is everywhere and always to nuke the dollar…hence a DUAL mandate for the Fed (employment and price stability….notice it says EMPLOYMENT…not an “unemployment rate.)
The Fed having failed the former will now fail at the latter.
I say again ” all for the entertainment value.”
I also say again this is not a buy recommendation. “Your two year old might get eaten by an Alligator!” (now compute the odds of that …
It changed drastically overnight.