Futures Traders Are Calling the Fed’s Bluff; March Rate Hike Probability Dives to 31%

Next up June. Futures traders are playing with fire, lulling an already scared-shitless stock market into a false sense of security, attempting to hemlock the Fed into not jacking up interest rates, (count ’em) four times in 2016.

Futures traders at the CME now indicate the central bank will not move on rates until June, following a major selloff in the market Friday morning. The chance of a March hike, above 50 percent just a few days ago, has dwindled to 35 percent.

The next closest month for a hike is now June, which has a 54 percent probability. Earlier in the morning, expectations had put the hike off until July, but that pulled in after New York Fed President William Dudley said in a speech that he still sees rates on a steady trajectory higher.

Despite global equity markets crashing through the floor boards the first 10 days of 2016, Federal Reserve talking heads still went out and said the economy was strong enough and awesome enough to absorb, and rather enjoy, 16 rate hikes over the next 3 years.

Should the Fed pursue this strategy with vigor, the last rate hike will be announced atop of mountain of smoldering rubble–in the midst of American revolt.

Does anyone really doubt it? Tonight, the Chinese will announce Q4 GDP numbers–which are expected to come in at 6.9%. This analyst says, according to the data he’s reading, the Chinese are lying and their economy grew by just 4.5% in 2015.

Judging by the price of copper, oil and iron ore, I’d be surprised to learn if the Chinese were growing at all.

I smell recession.

Classic expression on the face of the CNBC asia host when he said 4.5%

This is going to be a live, interactive, event, spanning 5 days. Guest hosts will include Jeff Macke, The Option Addict and Raul, who will dive into Exodus.

I strongly encourage you to give this a hard look, as it is designed to tackle the complexities of investing in a tape like this. Demand providing, I will be making these bootcamps regular features for iBC, at least once per quarter.

Sign up now and BEHOLD the greatness and grandeur of an iBankCoin hosted investor conference.

You didn’t think we could have a market panic without the european banks having a go at your emotions, did you? Out of nowhere, the PIGS are back on the charcuterie table- with Portuguese/German bonds spreads widening, Italian, Greek banks plummeted. And, of course, the ECB is interested in making matters infinitely more complicated by throwing a bunch of red tape around the issue.

An ECB spokesman said on Sunday a number of banks would be asked about high levels of non-performing loans. The burden of such loans, particularly in Greece, Portugal, Spain and Italy, is curbing the euro zone’s economic recovery by limiting banks’ ability to lend.

“The uncertainty in the market, be it in Europe or wherever else, is causing these banks to suffer,” Mark Foulds, sales trader at ETX Capital, said, adding that the sector was also under pressure from recent volatility linked to China.

“When the markets fall like they have done, everyone feels on edge. The market is dire, and there’s not the liquidity that there used to be, which can mean the market gets oversold.”

Truth be told, I have a headache and don’t have the patience to dive into this right now. Let’s just assume everything is horrible in Europe and the Nazis will make life exceedingly difficult for the PIGS (Portugal, Italy, Greece, Spain). I am certain this new crisis will escalate on a cartoonish scale until the irresponsible half-men in europe decide to end it by bailing everyone out again.

IMPORTANT NOTICE: Ibc is hosting a February investors boot camp, online, with Jeff Macke, The Option Addict and Raul giving a thorough review of Exodus. It’s a one week live video event that will help you get a better read on this tape.

THERE IS NOTHING TO SEE HERE. Move along. The economy is doing fantastic. We’re all super rich and the Fed should hike interest rates 20 times this year.

Everyone should have a shopping list of great companies to buy when markets get smashed to pieces. In the event you were too slothful to partake in a little research yourself, Le Fly is here to save the day–once again–to provide you with the ammunition you need to prosper, whenever the hell the market decides to tick higher.

For the sake of organization (Le Fly is a stickler for organization), I’ve broken down my favorite stocks per sector, with ytd returns next to it.

(FYI: For Exodus members: this list is derived from the FCF portfolio inside the Grid)

Basic Materials: VLP (-13%)

Consumer Goods: MNST (-5%), DEO (-6%)

Financial: V (-7%)

Healthcare: JAZZ (-11%)

Industrials: TDG (-4.5%)

Services: AMCX (-2%)

Tech: GOOGL (-9%), AVGO (-17%)

Utilities: WEC (+2.8%)

I know this list is conservative and it lacks the brand of degeneracy that many of you exhibit each and every day of your lives. But, given the level of misery being doled out by the markets, I had to dial back my aggressive ax swinging Viking side of me, in favor for a more genteel approach to finance. These are hard, dark, insidious days. The type of days that will snuff out your portfolios and leave you on the side of the street, stranded, without clothing. Rip yourselves away from the goggle-box and sort out your finances. Play the bounce like a gentleman and then remove yourselves, if I might be so bold, like a cavernous Cro-Magnon as soon as the rally has exhausted itself.

The epic drop in the dry bulk index is starting to get some love. Instead of ignoring it as the useless “boat crap” index that it is, Deutsche Bank’s chief economist of Asia, Mr. Baig, posits “there is an over-capacity of dry goods and lack of demand.”

How wonderful.

By dry goods, essentially, he means iron ore, steel, tungsten, things of that nature. No one needs that shit anymore. We’re all building homes out of adobe and straw, chimneys made from wood, just like they did it in New Amsterdam, circa 1640.

The BDI is now, clownishly, quoted at 373.

A laughable display of #fuckery over the past month

1 yr chart of BDI in all of its squalor

Chinese markets are green. The initial flush out of crude, down 4%, has all but erased the losses. And Nasdaq futures are higher by 24.

The involuntary castrations have halted. The bulls have seized control of the ancient relic inside of the city square and are now rolling it towards the the meeting house where the bear are domiciled.

Rumor has it, this relic will be used to expedite punishment, to both shock and amaze all of the townspeople and law breakers to stop fucking with the stock market.

DEVLOPING…

The one percent haven’t had it this good since the ancient roman days when they’d get to flog women and children in the streets for looking at them sideways, seizing men and forcing them to battle to the death in gladiator pits, to “please the mob.”

These days the elite cruise around in their boats, or drink cherry soda pops while bailing out Goldman Sachs from their fucking bath tubs.

Oxfam also calculated that 62 individuals had the same wealth as 3.5 billion people, the bottom half of the global population, compared with 388 individuals five years earlier. The wealth of the most affluent rose 44 percent since 2010 to $1.76 trillion, while the wealth of the bottom half fell 41 percent or just over $1 trillion.

The charity used the statistics to argue that growing inequality poses a threat to economic expansion and social cohesion. Those risks have already been noted in countries from the U.S. to Spain, where voters are increasingly backing populist political candidates, while it’s sown tensions on the streets of Latin America and the Middle East.

“It is simply unacceptable that the poorest half of the world’s population owns no more than a few dozen super-rich people who could fit onto one bus,” said Winnie Byanima, executive director of Oxfam International. “World leaders’ concern about the escalating inequality crisis has so far not translated into concrete action.”

The alarming part of this dichotomy is that it always ends badly for the 62 guys with all of the boats and cherry sodas.

This is a major success for the PBOC, avoiding the ordinary 3-5% decline in favor for a rip roaring market, down just 0.58%. The Samurai in Japan aren’t as lucky. Their markets are being walked down by almost 2%. And oil has recovered most of its losses, down just 1.75%.

Down a little is the new up.

In other news, Chinese regulators are wiping egg drop soup off their faces, trying to explain the recent spate of monumental and epic failures. To remedy this issue, they will likely commit wanton acts of piracy against American institutions to learn about how civilized people regulate criminals trading in the market.