Following today’s retail sales report, the GDPNow Forecast for fourth quarter GDP rose from 3.1% to 3.3%.
In related news, Curve Watcher’s Anonymous notes a 90.6% probability of a rate hike in December.
Latest Forecast: 3.3 percent — November 15, 2016
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2016 is 3.3 percent on November 15, up from 3.1 percent on November 9. The forecast of fourth-quarter real personal consumption expenditures growth increased from 2.6 percent to 2.9 percent after this morning’s retail sales report from the U.S. Census Bureau.
December Rate Hike Odds
Next Hike Expected June 2017
Above charts from CME Fedwatch, annotations by Mish.
The market thinks a hike is coming in December and so do I, finally. There’s plenty of time for the Market’s June 2017 opinion to change.
The market delivered this message toady: “I am the market and I approve this message“.
Mike “Mish” Shedlock
“The market delivered this message toady: “I am the market and I approve this message“.”
Probably meant “today” not “toady”. But I’m good with either.
So this guy has a hard day, he is trying to sell door to door and gets nowhere, the last house he calls at the owner starts yelling at him, finishing with the words ‘… you’re a toad, you hear. A TOAD ‘
So he sulks back home upset, gets to his PC and thinks he’ll read something to change his mind over at Mish’s. He skips through an article without taking it in, on his thoughts is selling nothing and someone yelling him a toad. When he gets to the last line a sentence jumps out at him…
“The market delivered this message toady: “I am the market and I approve this message“.”
Too much for him to bear, he renounces sales and lives in a swamp ever after as penance.
I wouldn’t pull the trigger quite yet. Almost an entire month separates us from the date of the next Fed meeting. A lot can happen in that time span. I believe nothing until I see it with my own eyes. The recent election only reinforced my belief. I wouldn’t put the chances of a rate hike anywhere near 90%. Keep your powder dry.
DXY > 100
$US up almost 5% since first of October.
Double whammy for S&P corporations
Strong dollar extra hurt on offshore sales + earnings on those sales will face negative fx treatment.
Hike into King Dollar on steroids?
Maybe … but like you, I’ll believe it when I see it.
Keep your eye on China (yuan)
https://www.bloomberg.com/quote/USDCNY:CUR
Currency war heating up
Nothing is going for the media and experts. Trump wins and the stock market goes straight up. More gridlock is on the way. Trump will get frustrated and use the pen to get things done. Democrats will cry that it is wrong and CNN will complain for the next four years.
Gridlock, how do you figure? Paul Ryan says GOP is now on-board with Trump; McCain an obvious War Party exception on Putin and Russia reset. This is a window to get a lot done, and if they are smart in what they choose to do the GOP could increase their Congressional advantage next cycle.
As to rate hikes, judging by the markets, this obvious non-event was long ago baked into prices because market participants know the election cycle factors heavily into the Central Planning Politburo (FED) timetable. The numbers are just an excuse, a cover story to do what they want to do when they want to do it. Back in March I asked a bankster about rate hikes, and without hesitation the answer was “after the election.” Why waste time on numbers that do not matter? Best to remove the FED from the interest rate levers, if such a thing as a free market in interest rates is even possible. Hard to envision.
If they hike in December, it will be done to blame the results on Trump. Record high DOW, NASDAQ finally climbed again, S&P climbs when oil goes up 2 bucks and inventories are building, corporations buyng back shares while the P/E s are elevated. Mexico, China, Japan, et al, devalue their currencies. EU falling apart and debt building still. Where does this crap come from. We still have to shake out the turds of the 2009 crisis. I’m not trusting much theses days. How far will the oligarchs take this to keep the status quo?
Brexit, the Cubbies, Trumpocalypse……probably safe to say that NOTHING is a ‘sure thing’ this year.
It is always good to correlate the GDP growth with additional graphs: total personal debt, mortgage debt, and total debt outstanding.
The 90.6% probability that Curve Watcher’s gives is impressive. The Huffington Post gave a 98% probability of a Clinton victory on November 7th.
Let rates normalize already. Enough with the ZIRP war on pension plans, 401ks, and insurance companies (affecting insurance premiums people pay).
Long term rates are rising. I hope it continues for a while.
The Fed might relent this December in appeasement to Trump, then sit on their upright thumbs for several months or longer if they think they can.
New age central bank thinking where central banks print the world into prosperity and use negative rates as an implied tax to pay for it appears to be ending. I wonder if we’ll ever get the whole story about how this developed. Bernanke was one of the architects and not by accident, I believe. He saw a crisis and used it to promote a pet theory that was supported by one-world-order types who live in the shadows. “Normalized rates will never be seen in my lifetime” is a famous quote of his. This implies a plan in motion and not simple temporary accommodation for a financial catastrophe.
Finally, our national, no … our world wide, nightmare is over. Sorry about the coming debt bubble ka-booom but I wasn’t the one who thought it up. Blame the idiot new age central bank negative rate utopian thinkers.
Any comments on the direction of the DOW if the Fed raise rates this time, recalling our last rate hike resulted in a downward trend adding up to an 11% drop, should we expect something similar bar? All argument are welcome!