Jeff Gundlach Warns That “Something Changed” At The Fed

Something has changed according to Jeff Gundlach. After claiming that a rate hike is “inconceivable” asrecently as a month and a half ago, a stance which he softened somewhat in recent days, Gundlach said that the Fed has changed the conditions required for a potential interest-rate hike this year.
Cited by Bloomberg, Gundlach believes that the Fed’s thinking has shifted from, ‘if the data pattern improves we will have the green light to hike,’ to ‘unless the data pattern weakens we have the green light to hike.’”
Perhaps, but surely only as long as the S&P, pardon the “economy” remains above 2,000. The second theS&P, pardon the “economy” slides back under that critical for the Fed level, one can forget all about any rate hike for the foreseeable future as the Fed will never risk crushing the wealth effect it has built up over 8 years of careful micromanagement and market manipulation.
And that is precisely what the market, which understand the reflexive relationship with the Fed much better than the group of career academics locked up in the Marriner Eccles building ever could, is going for: pushing the S&P, pardon the “economy” back under 2,000 so that any hiking ambitions Yellen may have are promptly pushed back by another three months.

This post was published at Zero Hedge on 05/19/2016.