Miercoles 29/04/25 la decisión del Fed

[Fenix]

'Hawkish' Hilsenrath Confirms Fed Not Worried About Q1 Growth, Rate Hikes Coming
Tyler D.
04/29/2015 14:21 -

At a stunning pace of 608 words in just 4 minutes, The Wall Street Journal's Fed-Whisperer, Jon Hilsenrath, has proclaimed his "common knowledge" meme for today's FOMC statement. Confirming that officials "aren’t at this point alarmed about the first quarter slowdown," and in fact stating they are confident of spending picking up due to consumer sentiment (which just fell)... which leaves them signalling no shift in policy stance - i.e. rate hikes are coming whether the economy can handle it or not...

Via The Wall Street Journal,

Federal Reserve officials attributed the economy’s sharp first-quarter slowdown to transitory factors, in effect signaling an increase in short-term interest rates remains on the table for the months ahead although the timing has become more uncertain.

The Fed now needs time to make sure its expectation of a rebound proves correct after a spate of soft economic data. That means the chances of a rate increase by midyear have greatly diminished, a point underscored by the Fed’s statement released Wednesday at the conclusion of a two-day policy meeting.

“Economic growth slowed during the winter months, in part reflecting transitory factors,” the Fed said. The Fed also said that although growth and employment had slowed officials expected economic activity to return to return to a modest pace of growth and job market could continue to improve, “with appropriate policy accommodation.”

The gathering concluded a few hours after the Commerce Department reported the U.S. economy grew at a 0.2% annual rate in the in the first quarter. It was the worst performance in a year, pocked with evidence of a slowing trade sector and anemic business investment. The report also showed annual consumer price inflation slowed in the first quarter.

For now, the Fed isn’t signaling any shift in its policy stance. It repeated it would keep its benchmark short-term interest rate, the federal funds rate, pinned near zero, where it has been since December 2008. Officials in March opened the door to rate increases later this year, by removing from the policy statement assurances rates would stay low.

The policy statement said, as it did in March, that the central bank would raise rates when officials become reasonably confident that inflation is moving back up toward the Fed’s 2% objective and as long as the job market continues to improve.

Officials sought to acknowledge the recent economic downshift in their policy statement, while keeping their options open. The pace of job gains moderated, the Fed statement said, and measures of labor market slack were little changed. Business investment softened and exports declined.

The statement also said officials saw the risks to the outlook were balanced - an important sign that they aren’t at this point alarmed about the first quarter slowdown. Many officials believe that conditions are ripe for consumer spending to pick up in the months ahead, in part because employment, incomes and confidence have risen and falling gasoline prices have boosted household purchasing power.

The statement pointed to strong gains in inflation-adjusted household incomes and consumer sentiment, underscore this view.

Nobody dissented at the meeting. It was the fifth time in 10 meetings run by Fed Chairwoman Janet Yellen with no dissents.

Fed officials thought the 2014 slowdown was a temporary blip and in that case proved to be right. Economic growth picked up in the second and third quarters of last year... will 2015 be different?

[Fenix]

"Not Patient" Fed Blames Snow For Weakness, Removes Calendar Guidance
Tyler D.
04/29/2015 14:03

With everyone hoping that The Fed says something dovish (because after all stocks are 1% off their highs) there was some disappointment as the weakness was shrugged off as transitory:

* *FED SAYS WINTER SLOWDOWN PARTLY REFLECTS `TRANSITORY FACTORS'
* *FED SEES MODERATE GROWTH, JOB GAINS EVEN AFTER 1Q SLOWDOWN

In the end, once again, the dovish Fed provides just enough wealth-creating hope to keep stock dreams alive but knows it has to move sooner rather than later (keeping the "but we think the economy will strengthen" meme alive).

Pre-FOMC: S&P Futs 2099.50, 10Y 2.04%, EUR 1.1175, Gold $1210, Oil $58.85



Here is the best, and really only notable part:

Information received since the Federal Open Market Committee met in March suggests that economic growth slowed during the winter months, in part reflecting transitory factors. The pace of job gains moderated, and the unemployment rate remained steady. A range of labor market indicators suggests that underutilization of labor resources was little changed. Growth in household spending declined; households' real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remains high. Business fixed investment softened, the recovery in the housing sector remained slow, and exports declined. Inflation continued to run below the Committee's longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable.

So the economy slowed down during a transitory winter... which means that the Fed will only hike from now on in California? Real income rose strong... due to deflation, and "consumer sentiment remains high" as can be seen in the photo below.

To summarize.

When the most important central bank in the world blames snow for the economy slowing, you know your economy is fucked.

— Stalingrad & Poorski (@Stalingrad_Poor) April 29, 2015

* * *

As Forward Guidance remains a dim and distant bullshit dream...

#Fed is changing the goal posts as they see fit. Forward guidance, forward schmuidance @pdacosta #USD pic.twitter.com/PCKXJC222K

— Martin Enlund (@enlundm) April 29, 2015

* * *

By way of interest, since the March FOMC meeting, Oil is up 22%, Gold & Silver up 4.75%, Stocks and credit unchanged, and bonds modestly higher (lower in yield)...



Flash Crash Scapegoat Can't Afford Bail, Will Remain In Prison
Submitted by Tyler D.
04/29/2015 - 13:14

The news of Navinder Sarao's arrest, the scapegoat for all that is broken with the world's equity markets, may have come, gone and be largely forgotten, but while the CFTC is happy to have washed the corruption and incompetence off its hands by destroying the career of one insignificant trader (whatever happens, redirect public attention from the HFT firm that just came public and boasted of one trading loss day in 6 years) Sarao is facing decades in prison. And, what is worse for the alleged mastermind of the May 2010 flash crash, he won't even be able to enjoy a few weeks in quasi-freedom. Why? Because this lonely 36 year old, who "crashed" the entire market 5 years ago from his parents' basement (literally), can't even afford bail.



To Commerzbank, German Bunds Are "Flash Crashing"
Submitted by Tyler D.
04/29/2015 - 11:36

As first Bill Gross and then Jeff Gundlach suggest shorting German bonds, so it appears the message has sunk in that at 4.9bps 10 days ago, 10Y Bund yields were the short of a lifetime. Since then they have soared, with a dramatic doubling today from 14bps to over 29bps - the highest yield in 7 weeks. As Commerzbank warns, "a cascade of small events is creating a large splash in a structurally ever-thinner market," which has led to a plunge "similar to US Treasury flash crash of Oct. 15."

[Fenix]

Even Wall Street's Biggest Permabulls Are Throwing In The "Recovery" Towel
Submitted by Tyler D.
04/29/2015 - 13:04

Unlike last year when every single weatherman, pardon "economissed", quickly declared the collapse in Q1 GDP from an initial consensus of 3% to an abysmal -2.5% was due to the weather, and not due to a dramatic tightening in Chinese end demand, this time there is suddenly no silver lining, and one after another, the economisseds are lining up to say that, ooops, they were all wrong.



Biggest Inventory Build In History Prevents Total Collapse Of The US Economy
Tyler Durden's picture
Submitted by Tyler D.
04/29/2015 12:55

While we already observed that in Q1, US GDP rose by an appalling 0.2%, far, far below the consensus Wall Street estimate (in case you missed it, here again is the one thing every Wall Street economist desperately needs) and precisely in line with the Atlanta Fed forecast which we brought attention to in early March, confirming yet again that US stocks no longer reflect any fundamentals but merely Fed and global liquidity injections, there is something far more disturbing under the surface of today's GDP report.

Inventories.

Specifically, the $121.9 billion increase in private, mostly nonfarm, inventories in the first quarter.

Cutting to the punchline, this was the biggest inventory build in history.

Another punchline: in Q1 2015, the US economy rose by a paltry $6.3 billion in nominal terms to $17.710 trillion.

Here is how the total GDP growth compares to just the increase in inventories, which as we wrote earlier this week, is the primary reason why the world is now gripped in a global deflationary wave.

In other words, if US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be -2.6%.

Oh heck, just round it down to -3.0%

Which means that as this massive inventory overhang is eventually cleared out (once the US runs out of space to store all these widgets, gadgets and raw materials, here's looking at you Cushing) US GDP will be pressured even more with every passing quarter, or else the moment of deflationary rapture when everyone is forced to liquidate and/or dump this inventory at the same time, will result in a monetary supernova which will leave the Fed with no choice but to literally paradrop money on the continental US.

[Fenix]

The Harsh Winter Actually Boosted The US Economy In Q1, As Did Obamacare
Submitted by Tyler D.
04/29/2015 - 10:35

What surprised even us is that far from subtracting from GDP growth, the harsh winter actually boosted consumption, in the form of utiility (mostly heating) spending, which made up the second largest increase in personal consumption in the first quarter. Because, to every economist's cries of horror, freezing weather while perhaps reducing discretionary spending actually boosts spending on such mundane, if very expensive, tasks as utilities which, to the same economists, also translates into growth.



The Great Unwind Begins: US Dollar Plunges To 2-Month Lows
Tyler D.
04/29/2015 11:17

Just when you thought it was safe to pile all your money (at maximum leverage) into USD-denominated assets, the greenback plunges... The last 4 days have seen the 2nd biggest drop in 6 years. This has very significant consequences for a world that has become entirely consensus-based across at least 5 major themes... This poses a problem for talking-heads: if USD strength as indicative of US economic strength... what does a plunging USD imply?

The Strong Dollar regime has changed...

This suggests the huge consensus trades surrounding the inexorable USD strengthening are all in trouble also...

Charts: Bloomberg and Cornerstone Macro



Pending Home Sales Rise In March As Weather Effect Dissipates
Submitted by Tyler D.
04/29/2015 - 10:08

Following the plunge in new home sales (and surge in existing home sales), pending home sales rose slightly more than expected in March. Up 1.1% MoM (vs +1.0% exp), this is still a slowing in the pace of appreciation from February's upwardly revised 3.6% jump. A 13.4% surge YoY (NSA) has prompted exuberance from NAR as they throw off any vestiges of weather-related problems and proclaims the spring housing market is back (except Northeast saw sales drop 1.5% - for the 4th straight month; and The Midwest fell 2.5% MoM).



Gundlach Considers 100X Leveraged Bet Against German Bunds
Submitted by Tyler D.
04/29/2015 - 09:46

The "new" Bond King joins his predecessor on the bond throne in calling German Bunds a compelling short opportunity. Just as we said last week, "when you short negative yielding bonds you have a positive carry," so why not leverage your bet 100X and get paid to wait on rising yields?



The Mysterious US-Session Bond-Seller Is Back
Submitted by Tyler D.
04/29/2015 - 09:19

After taking 2 days off last week, the mysterious but persistent US Treasury bond seller is back. Like clockwork as the US markert awakes, no matter what the trend overnight, Treasuries are offered in size and yields snap higher...