Fed’s Brainard Tells Everyone to Chill Out with the Rate Hikes

The only intelligent woman at the Fed, Brainard, seemed to be talking directly to her hawkish cohorts this evening, essentially telling them to chill the fuck out and take a laxative.

Weak growth abroad has pushed up the value of the U.S. dollar, pushing down on inflation and the level of interest rates that the economy can withstand while still generating jobs and growth, Fed Governor Lael Brainard told the Stanford Institute for Economic Policy Research.
One model in common use at the Fed suggests a 1-percentage-point cut in rates would be required over the medium term to offset the negative impact on employment of the stronger dollar, she said.
With short-term borrowing costs now near zero, “(t)his shift down implies a delay in the date of liftoff and a shallower path for the federal funds rate over several years,” Brainard said. “In effect, this spillover from abroad implies some limitations on the extent to which U.S. monetary conditions can diverge from global conditions.”
Brainard’s warning against raising rates too quickly echo those of the Fed’s most dovish voting policymaker, Chicago Fed chief Charles Evans, who earlier in the day repeated his view that the Fed has plenty of tools to make things right if it falls behind the curve on lifting rates, but few tools if it mistakenly raises rates too soon.
Speaking just two weeks before the Fed is widely expected to end seven years of near-zero interest rates, Brainard declined to say if she would oppose such a move but instead pointed to the policy debate that will likely dominate discussion at the U.S. central bank once the tough decision of that first rate hike is past: just how long should the Fed wait before raising rates again?

Like bond king Gundlach, Brainard is merely speaking with common sense. YOU DON’T HIKE RATES INTO A DEFLATIONARY VORTEX.

The market is calling bullshit on rate hikes anyway, with yields super low and stocks vegging out ahead of the meeting. If the Fed pauses (no homo) on the rate hike suggestions from Plosser and other assholes at the Fed, stocks will fucking roar like you’ve never seen before. Men and women alike will dance in celebration, in the streets, doing lines of blow off champagne corks.

On the other hand, if they do raise rates, I’m afraid you’re all doomed.

Happy trading.