Tags: fed | rate | economy | hike

6 Fed Members Speak But There Isn't 1 Clear Message

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Friday, 13 Nov 2015 07:32 AM Current | Bio | Archive

On Thursday, we had no less than six Fed members that spoke in public and not a single one said explicitly we’ll have a first rate hike on December 16, which is understandable.

They all said implicitly the FOMC members are lining up for a December lift-off.

N.Y. Fed President William Dudley depicted in his 'prepared' speech the overall situation at present very well: “… I think it is quite possible that the conditions the Committee has established to begin to normalize monetary policy could soon be satisfied … I will be evaluating the incoming information to see if it confirms my expectation that growth will be sufficient to further tighten the U.S. labor market. After lift-off commences, I expect that the pace of tightening will be quite gradual.  In part, that is because monetary policy is not as stimulative as the low level of the federal funds rate might suggest…”

In fact, we could say the Fed gave a remarkable demonstration of synchronized speaking, implicitly of course, while for now at least, the strength of the dollar doesn’t seem causing a great deal of concern.

Also on Thursday, the initial claims for unemployment insurance came in at 276,000 with the 4-week average at 267,750 and remained thereby at a near 15-year low.

The real good news came from the Job Openings & Labor Turnover Survey (JOLTS) as reported by the Bureau of Labor Statistics (BLS) where, "for the first time since the 2007-2009 financial crisis," four of the nine monthly indicators that Fed Chair Janet Yellen calls her “dashboard” of jobs data to gauge the slack left in the labor market, were back to where they were in the 4 years leading up to the 2007/2009 crisis.

The “jobs openings rate” now stands at 3.7 percent against its 3.0 percent pre-crisis level; the “layoffs/discharges rate” now stands at 1.2 percent against its 1.4 percent pre-crisis level; the “nonfarm payrolls” now stand at 187,000 against its 161,800 pre-crisis level and the “unemployment rate” at 5 percent is back to exactly its pre-crisis level. The “labor force participation rate” remains the only relatively weak point as it stands at 62.4 percent, or 3.7 percent below its 66.1 percent pre-crisis level, but should be taken with caution because of the fundamental shifts that are going on in job generation and the composition of the U.S. workforce.

Also on Thursday we saw the Bloomberg Commodity Index printing its lowest level since July 1999, which is in itself remarkable, but also worrisome as it is rightly considered as a leading indicator of global growth.

Also crude oil printed 60.50 percent lower than the high we saw in the summer of 2014.

The just released International Energy Agency (IEA) “Oil Market Report” wrote today: “Global demand growth is forecast to slow to 1.2 million barrels per day (b/d) in 2016 after surging to a five-year high of 1.8 million b/d in 2015,” which indicates to interested investors lower oil prices should not come as a surprise in the foreseeable future.

Finally, and especially as at present a good part of long-term investors think the euro area is one of the better places to invest notwithstanding the single currency area remains economically very weak and doesn’t show signs of improvement, especially when we look at recent data.

The unemployment rate came in at 10.8 percent; The annual inflation rate came in at 0.0 percent; Industrial producer prices were down by 0.3 percent; Retail trade was down by 0.1 percent; Industrial production was down by 0.3 percent and today we got a disappointing GDP growth number that came in at  positive 0.3 percent during the 3rd quarter, which represents a plus 1.2 percent on a yearly basis, but both below consensus of respectively 0.4 percent and 1.7 percent.

As Mark Twain said: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

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HansParisis
As Mark Twain said: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
fed, rate, economy, hike
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2015-32-13
Friday, 13 Nov 2015 07:32 AM
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