This is a nice, cordial, market ahead of the Yellen speech. It’s highly unlikely she will hike rates today. However, the market wants to know which one of those asshole Fed heads wanted to. Moreover, every syllable of her statement will be parsed and vetted for keywords that will tell us when the Fed will hike next.
My belief, from the start, is that rates should be permanently at zero because of the $19 trillion debt burden, coupled with the fact that I rather enjoyed POMO. However, the tone and tenor of this Fed are appreciably more hawkish than the Bernanke Fed, which leads me to believe they will stop at nothing to hike rates, whenever they can.
As such, I believe today’s meeting will point towards a June hike. The markets are firmly in denial, high on nitrous oxide, laughing like little bitches at all the bad news because nothing can go wrong. Hell, we might rally after the statement and squeeze the shorts a little more, formerly a favorite avocation of mine. But, make no mistake, the market will not like the reality of higher rates, when they do finally befall on his market.
Ahead of the news, oil is higher by 3.6%. Both the dollar and bonds are higher and gold is flat.
My hunch: sell the news.
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where’s my WTI up 4% oil shorts getting roasted story?
June rate hike highly likely but not advised. Fed is trying to head off inflation based on 1970 economic principles. The world is consuming far less stuff than it did 15 years ago and I expect the trend will continue. I expect inflation to remain fairly tame for a long time. But raising rates will certainly result in consuming even less stuff once the Fed induced recession kicks in.
True about their being stuck in 1970. Speaking of people who, like the GOP establishment, are enclosed in bubbles and out of touch with the outside world, the Fed certainly is one such group. Someone go tell them it is not 1970