Interest Rate Thread

[Stockolio]

I really do not think Powell & Co have the cohones to destroy the market Wensday, I have a big call on a gold mine exp Jan 19, big position on Energy Fuels ( UUUU ) and tiny call on a company about to switch from C corp to REIT exp April 19, for my optimistic plays. I can not see why they would raise the interest rates, it can only hurt and speed up the collapse, no beneficial purpose can come from raising rates at this point and time

What is the logical outcome if they raise rates and is it over as far as any buying or calling until the next signal of QE wave ? I had plans to close positions mid January due to Brexit and go 100 % of account PUTs, but I need a rally for it to work effectively... If they do not raise rates, how thin can we logically stretch it before placing series of next plays ?

 

[themickey]

I really do not think Powell & Co have the cohones to destroy the market Wensday, I have a big call on a gold mine exp Jan 19, big position on Energy Fuels ( UUUU ) and tiny call on a company about to switch from C corp to REIT exp April 19, for my optimistic plays. I can not see why they would raise the interest rates, it can only hurt and speed up the collapse, no beneficial purpose can come from raising rates at this point and time

What is the logical outcome if they raise rates and is it over as far as any buying or calling until the next signal of QE wave ? I had plans to close positions mid January due to Brexit and go 100 % of account PUTs, but I need a rally for it to work effectively... If they do not raise rates, how thin can we logically stretch it before placing series of next plays ?

The Fed are not swayed by Trumps twitter account tweets, nor is the Fed swayed by short term markets gyrations.
The market has already factored in the Fed's anticipated Dec rate rise.

 

[Stockolio]

Financial media which is an arm of certain firms, heavily pushed the December raising rates since November, given the message and agenda that has been trying to get pushed, even today reading some articles of mainstream financial media, they all type likely to raise rates... I just do not see it, why ? They will likely leave them neutral and have a very positive message, switch there lane and raise them when nobody is expecting it January 29-30 or March 19-20, it would be far more beneficial for the shot callers to pull it off that way... Why would they let the herd know in advance of the plot ? I do not see it, please explain why you think they will be raising them Wednesday ?

 

[sle]

I do not see it, please explain why you think they will be raising them Wednesday ?

Because FedFunds futures seem to think so to the tune of 60%. On a policy front, they need ammo for the next time they want to cut, so they have to hike aggressively while they still can.

 

[Kevin Schmit]

. I just do not see it, why ? They will likely leave them neutral and have a very positive message?

Disagree. They will likely raise but sound dovish (or at least more dovish then they have been lately) on future actions in comments.

We can revisit on Thursday and see who was right. Either way, buying broad market or financial indices around 11:00 am Tues and selling at 2:00 pm Weds has been a reasonably consistent winner in recent years. Not 100%, more like 60%+, but still pretty good.

 

[Stockolio]

You guys ow me one for this... Gonna roll a J and type down a very short thesis on actual rates and how the Fed's perceived actual rates are, knowing how your opponent thinks is extremely crucial in trading in my opinion.

Since the last recession, due to 4.5 Trillion in QE ( according to St Louis fed data ), the fed came up with a real way to calculate interest rate in a QE environment under a theory called Shadow Rate, by Jing Wu and Fan Xia. By there measure, the shadow rate hit a low of -3 % May 2014, and the last QE program finished October 2014, from May 2014 to December 2018, the rates have risen 5.20 %, driven by the fed drawdown in balance sheets... Assets mature, principles are repaid, cash is repaid to the fed and taken out of circulation. Philadelphia, Dallas and Atlanta Fed Presidents all said during the summer that the neutral level would be around 2.5 2.75 but given the context and global growth situation were in, it seems more then likely that 2.5 is the neutral and highest percent before the next end of cycle. The sudden slump in oil is a sign inflation is definitely set to come down along with US-China Tariffs being halted and likely abolished very soon for reasons of self preservation for both Presidents involved in dispute. The commodities market in general except gold has been getting drilled, indicative of global economy slowing at a fast rate. My theory is based off the fact that the fed has done enough tightening and is now forced to stop in current economic climate... Rate peak cycle happened in September and given the 6-9 month rule of gravity, the collapse should be within March ( coincides with Brexit ) to somewhere in June, according to Quant rules. Inflation expectations have dipped below the 2 % mark mainly on the oil price decline and willingness by both China-US to stop the tariffs, with everything taken into account by there own measures, should warrant a no raise interest rates for the moment.

Conclusion is that there will absolutely only be one more rate hike before recession, and whether its December 19 or January 30th 2019 who really knows, but the Fed's Standard indicators point to a non rate hike December 19

 

[Stockolio]

Were fucked... Man I should of closed calls, long stock.

Couldn't believe he would hike the world into a recession, the numbers do not make sense with what they did... Ahh man, lost a lot of money cause of this, I couldn't believe this was possible to be this incompetent... Recession is literally around the corner in January-February

 

[TheBigShort]

Disagree. They will likely raise but sound dovish (or at least more dovish then they have been lately) on future actions in comments.

We can revisit on Thursday and see who was right. Either way, buying broad market or financial indices around 11:00 am Tues and selling at 2:00 pm Weds has been a reasonably consistent winner in recent years. Not 100%, more like 60%+, but still pretty good.

Excellent call kevin!

 

[Cuddles]

Were fucked... Man I should of closed calls, long stock.

Couldn't believe he would hike the world into a recession, the numbers do not make sense with what they did... Ahh man, lost a lot of money cause of this, I couldn't believe this was possible to be this incompetent... Recession is literally around the corner in January-February

I honestly don't see how people thought he wouldn't raise

 

[themickey]

I honestly don't see how people thought he wouldn't raise

Well the consensus of opinion which I'm reading is that Powell raising rates at this point in time is a dumb move. Easing off the accelerator seemed more logical. USD gets stronger yet again, handing Xi a Christmas present while USA gets a lump of coal in their stockings.