“For the rest of the year, we think global credit risk will veto the Fed’s policy path (no hikes) and therefore, gold and the gold miners are going to do very, very well in that environment in 2016.”
Bear Traps Report’s Larry McDonald, January 2016 on CNBC
Aspen Institute in Aspen, Colorado on Sunday
Don’t miss our next trade idea. Get on the Bear Traps Report Today, click hereToday, Federal Reserve Vice Chairman Stanley Fischer said the U.S. economy moving ever so near to the central bank’s objectives and he expects growth to pick up in the future.
As a key member of Janet Yellen’s inner circle Stan Fischer’s words carry 10x the weight of non voting, regional Fed bank presidents.
Air Pocket
Considering over 3000 current Dow (Dow Jones Industrial Average) points are supported by the easy money Fed gravy train, we recommend keeping yours eyes and ears on him.
The Bloomberg dollar index is off 3% over the last 20 days while gold has been stuck in a trading range.
Don’t miss our next trade idea. Get on the Bear Traps Report Today, click here“We are close to our targets.. Looking ahead, I expect GDP growth to pick up in coming quarters, as investment recovers from a surprisingly weak patch and the drag from past dollar appreciation diminishes.”
Stanley Fischer
Over 547,000 new jobs have been created in June and July, so why is the Fed so cautious on the 2016 rate hike?
Fed’s Fischer
U.S. Job Market: “remarkably resilient”
U.S. GDP Growth: “mediocre at best.”
Fischer trying to balance out is speech here.
December Rate Hike vs Bloomberg Dollar Index*
Today: 52% vs 1166
Month Ago: 43% vs 1198
*weaker dollar with higher rate hike probability
Bloomberg data
We’re witnessing a remarkable divergence between the U.S. dollar and Fed Fund Futures. The dollar has plunged 3% over the last 20 days while the futures market is pricing in a much higher chance of a December Fed rate hike.
Don’t miss our next trade idea. Get on the Bear Traps Report Today, click hereFischer Balancing Hawkish Comments with Dovish Concern
“A 1.25 percentage point slowdown in productivity growth is a massive change, one that, if it were to persist, would have wide-ranging consequences for employment, wage growth, and economic policy more broadly,”
Stan Fischer
Fed Fund Futures vs Fed Dots*
Effective Fed Funds
Today: 0.40%
2017: 0.65% v 1.60%
2018: 0.78% v 2.36%
*Fed’s projections on rates
Bloomberg data
The futures market is giving the Fed the Rodney Danderfield, “no respect”. Traders are pricing in just one rate hike between now and the end of 2018. On the other hand, the Fed dots are pointing to seven rate hikes over the same time frame. This disconnect cannot stay this wide, it’s unsustainable.
Fed officials next meet Sept. 20-21. We will listen closely for additional clues on timing when Fed Chair Janet Yellen speaks Aug. 26 at an annual in Jackson Hole, Wyoming.
Don’t miss our next trade idea. Get on the Bear Traps Report Today, click here
