Black Every Day?

December rate hike priced in? Getting there, experts say

http://www.cnbc.com/2015/11/04/december-rate-hike-priced-in-getting-there-experts-say.html

If by priced in they mean has everyone that wants no part of a rate hike and being invested in stocks and already out of the stock market anticipating rotating into the bond market, that is certainly possible. But I reeeeealllly doubt it. There are institutions that are more of a "show-me" stance. Once the FED hikes, their entire probability structure changes on further rate hikes. I say this is a good 30% of the market has not acted on "higher rates".

If you ask the IR sensitive tech market its opinion, it (NQ) is green. It doesn't even believe the first rate hike rhetoric coming from the FED. It believes this is more bluffing of the FX market.
 
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nitro said:
December rate hike priced in? Getting there, experts say

http://www.cnbc.com/2015/11/04/december-rate-hike-priced-in-getting-there-experts-say.html

If by priced in they mean has everyone that wants no part of a rate hike and being invested in stocks and already out of the stock market anticipating rotating into the bond market, that is certainly possible. But I reeeeealllly doubt it. There are institutions that are more of a "show-me" stance. Once the FED hikes, their entire probability structure changes on further rate hikes.

I say this is a good 30% of the market has not acted on "higher rates"
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I don't get why they didn't raise in October? What market crash? China is up YTD, US is up YTD, Japan is up YTD, and everything is rosy....why the big fear for the small rate move from zero to zero?

Anyway nitro, I take it you are short SPX again?
 
noddyboy said:
I don't get why they didn't raise in October? What market crash? China is up YTD, US is up YTD, Japan is up YTD, and everything is rosy....why the big fear for the small rate move from zero to zero?

Anyway nitro, I take it you are short SPX again?
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Well, what happened in August is by any measure a "crash" by the sheer shock and awe of it. It wasn't really a bear market, which is what people really worry about. Why didn't they raise in October? It would take nerves of steel to have done so, and I don't think Yellen has those kinds of nerves. She would rather err on the side of caution. If she looks at the stock market, she is happy about her decision. It is a complete and total travesty that is an input to the FED even though they deny it.

I agree that .25 basis is stupid to worry about on its own. But everyone understands once the FED lifts off, it is going to be measured hikes. The stock market is a forward discounting method, so even if they raise say twice a year .25 until 2020, that is a significant competitor to stock dividends with the risk denominator in bonds significantly less than stocks. Make no mistake, it is a no small thing, even the first one. The reason the FED has waited so long is once they start raising, there is no going back. It would be inane to raise only to have to have to cut again to zero in 12 months.

As to my position, I am short the US market, but not short ES. My position is far more complex, although for the purpose of making it simple, saying I am short ES from 2100 is 75% accurate.
 
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eurusdzn said:
Emerging markets arent YET responding to the selloff in treasuries. I expect they will.
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Oh yes they did, for example their currencies are backing off. Although, maybe you mean SELLOFF instead of selloff. I agree with that.
 
Fed's Williams Says October Rate Decision Was a Close Call

"The U.S. economy has reached at least one measure of full employment and the decision to keep interest rates near zero in October was a close one, said John Williams, president of the Federal Reserve Bank of San Francisco.

“To my mind, the decision was a close call, in part reflecting the crosscurrents we’re navigating,” Williams said Saturday at an education event in Tempe, Arizona. “On one hand, the U.S. economy continues to grow and is closing in on full employment. On the other, in large part due to developments abroad, inflation has remained lower than we’d like.”..."

http://www.bloomberg.com/news/artic...ys-october-was-close-call-given-crosscurrents

If true, then the FFFs are undervaluing the December rate hike probability, by at least 10%. Still, no one believes the FED.
 
The FED doesn't care two shits about headline inflation. It cares about wage inflation.


wages.png
 
Boring does not always equal bullish.

The two opposing forces are:
  • Volatility tends to be mean reverting
  • High Volatility tends to be followed by high volatility and vice versa
Look at the huge spikes, far more regular than most theories predict. Beware of people that point to boring markets as bullish.

saupload_spx10td.jpg
 
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