Tags: Biderman | Fed | interest | rates

TrimTabs' Biderman: 'Fed Won't be Able to Raise Interest Rates' in 2015

By    |   Thursday, 26 February 2015 07:20 AM

Charles Biderman, CEO of TrimTabs Asset Management, doesn't buy economists' consensus view that the Federal Reserve will begin raising interest rates around mid-year.

"The Fed will not be able to raise interest rates this year," he writes on CNBC.com. "Why? Sustainable economic growth has not and is not occurring." Outside of strong employment growth, the economy doesn't so look so hot, he said.

GDP expanded 2.4 percent last year, the fastest pace since 2010, but more recent data look bleak, Biderman says. "The U.S. economy is slowing and could be entering into a shallow recession," he writes.

"The TrimTabs Macroeconomic Index, a correlation weighted composite index of leading economic variables, fell 0.6 percent in the past 10 weeks and is 0.8 percent below its October 2014 peak."

And what's stifling demand? "No-growth governmental policies," Biderman argues. "Since 2008, there have been fewer new businesses being created than those that are closing."

Fed Chair Janet Yellen said in her Senate testimony Tuesday that the central bank is unlikely to raise rates at its next two meetings in March and April.

Meanwhile, the federal funds futures market doesn't put the probability of a rate hike above 50 percent until October, according to CME Group, which runs the futures exchange. The Fed has kept its fed funds target rate at a record low of zero to 0.25 percent since December 2008.

Meanwhile, former Treasury Secretary Larry Summers, says the Fed is right to take a patient stance in raising rates.

"It should not raise rates until there is clear evidence that inflation, and inflation expectations, are in danger of exceeding its 2 percent target," former Treasury Secretary Larry Summers writes in the Financial Times. The Fed's favored inflation measure rose only 0.7 percent last year.

"The Fed could inject much needed confidence in the economy today and minimize future risks by announcing and following a strategy of not raising rates until it sees the whites of inflation’s eyes," he says.

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Charles Biderman, CEO of TrimTabs Asset Management, doesn't buy economists' consensus view that the Federal Reserve will begin raising interest rates around mid-year.
Biderman, Fed, interest, rates
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2015-20-26
Thursday, 26 February 2015 07:20 AM
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