Yellen Speaks, Yields Spike, Mortgage Rates Jump, Oil Plunges: But Why?

7th week of US Government debt ‘carnage’ continues unabated.
Stocks sold off, starting at 2:04 PM, as the Fed’s slightly more hawkish stance was sinking in. The S&P 500 ended the day down 0.8%. Not even a tempest in a teapot. Gold sold off, now down 17.6% since July. Oil plunged over 4%, but unrelated to the Fed: the market is figuring out that nothing beyond wild jabbering by oil potentates is happening to contain the oil glut. But natural gas jumped nearly 3%, based not on the Fed, but on the weather. And bonds? Another opportunity to use the word ‘rout’ or ‘carnage.’
The Fed increased its target rate for the second time in nearly a decade, after having done so a year ago for the first time. It raised it from next to nothing by nearly nothing to a little above nothing: a range of 0.5% to 0.75%. But according to its dot plot, whose reliability has become a joke, it will raise rates three times next year, up from the prior dot plot which indicated only two hikes.
At the press conference, Fed Chair Yellen explained the rate hike that everyone had taken for granted: ‘My colleagues and I are recognizing the considerable progress the economy has made toward our dual objectives of maximum employment and price stability….’

This post was published at Wolf Street on Dec 14, 2016.

After Raising Rates Once During The Obama Years, The Fed Promises Constant Rate Hikes During The Trump Era

Now that Donald Trump has won the election, the Federal Reserve has decided now would be a great time to start raising interest rates and slowing down the economy. Over the past several decades, the U. S. economy has always slowed down whenever interest rates have been raised significantly, and on Wednesday the Federal Open Market Committee unanimously voted to raise rates by a quarter point. Stocks immediately started falling, and by the end of the session it was their worst day since October 11th.
The funny thing is that the Federal Reserve could have been raising rates all throughout 2016, but they held off because they didn’t want to hurt Hillary Clinton’s chances of winning the election.
And during Barack Obama’s eight years, there has only been one rate increase the entire time up until this point.
But now that Donald Trump is headed for the White House, the Federal Reserve has decided that now would be a wonderful time to raise interest rates. In addition to the rate hike on Wednesday, the Fed also announced that it is anticipating that rates will be raised three more times each year through the end of 2019…

This post was published at The Economic Collapse Blog on December 14th, 2016.

Fed Now Expects Three Rate Hikes In 2017, Sees 1.8% Longer-Run GDP Growth

While the 25 bps rate hike was a given, the question on everyone’s mind was how many rate hikes does the Fed envision for 2017. The answer, somewhat surprisingly, is three, an increase of one compared to the September meeting.
This is median assessment of appropriate pace of policy according to the dots:
2016 0.625% (range 0.625% to 0.625%); prior 0.625% 2017 1.375% (range 0.875% to 2.125%); prior 1.125% 2018 2.125% (range 0.875% to 3.375%); prior 1.875% 2019 2.875% (range 0.875% to 3.875%); prior 2.625% For the longer run, the Fed now expects a 3% Fed Funds rate, (range 2.500% to 3.750%); up from the prior 2.875%.
A comparison of the dot plots:

This post was published at Zero Hedge on Dec 14, 2016.

‘Run On Banks’ As 72-Hour Mandate Forces Venezuelans To Turn In Large Bills: Strict Cash Controls

In the ongoing saga of Venezuela’s sad economic slide into hell, it came as a strong arm move on the part of President Maduro.
Bank runs are happening in Venezuela, but not to pull money from the banks; rather, to get their 100 Bs. bills into the banks before a 72-hour time limit expires and the notes become outlawed currency that is no longer officially recognized.
Long lines once again, and this time for the opportunity not to lose all the money that these struggling people have been saving up and safeguarding amid this insane and chaotic world of Venezuela:

This post was published at shtfplan on December 14th, 2016.

Fed Revises Reverse Repo Terms: This Is How It Will Implement The Rate Hike

As expected, in addition to raising the Fed Funds rate by 25 bps, the Fed similarly noted that it would revise the mechanics behind its reverse repo operations, raising the rate it charges on reverse repos by 25 bps to 0.5%, the actual means by which the Fed will hike rates for most market participants.
Here is the statement that the Fed released regarding the change in overnight reverse repos:
During its meeting on December 13-14, 2016, the Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York (New York Fed), effective December 15, 2016, to undertake open market operations as necessary to maintain the federal funds rate in a target range of to percent, including overnight reverse repurchase operations (ON RRPs) at an offering rate of 0.50 percent, in amounts limited only by the value of Treasury securities held outright in the System Open Market Account (SOMA) that are available for such operations and by a per-counterparty limit of $30 billion per day.
To determine the value of Treasury securities available for ON RRP operations, several factors need to be taken into account, as not all Treasury securities held outright in the SOMA will be available for use in such operations. First, some of the Treasury securities held outright in the SOMA are needed to conduct reverse repurchase agreements with foreign official and international accounts.1 Second, some Treasury securities are needed to support the securities lending operations conducted by the Desk. Additionally, buffers are needed to provide for possible changes in demand for these activities and for possible changes in the market value of the SOMA’s holdings of Treasury securities.

This post was published at Zero Hedge on Dec 14, 2016.

DEC 14/FED RAISES RATES BY .25%/HIGHLIGHTS 3 MORE RATE HIKES FOR 2018/STATES THERE WILL BE NO NEED FOR TRUMP FISCAL STIMULUS/ANOTHER MASSIVE RAID ON GOLD AND SILVER TODAY AFTER ANNOUNCEMENT OF TH…

Gold at (1:30 am est) $1161.30 UP $4.60
silver at $17.15: UP 15 cents
Access market prices:
Gold: 1143.40
Silver: 16.85
Today, the USA probably ignited their destruction and no doubt the entire globe. They have decided to raise rates which will cripple the emerging nations. China will reciprocate by devaluing the yuan as the Chinese currency is pegged to the dollar and thus the yuan actually rises against all other currencies except the dollar. So we should expect a huge devaluation in the next few days from China and thus the yuan should hit 7.00 to the dollar and then fall from there.china will be sending deflation throughout the globe. The Japanese yen is now 117 to the dollar and the citizens of Japan will now experience huge price increase in food imports. They will not be happy campers although the export side of things will be thrilled with the lower yen. The USA economy is not robust at all and the higher dollar will kill its exports. Donald Trump will not be a happy camper as he wants lower interest rates while he undergoes fiscal stimulation. He will not be a happy camper being told by Yellen that fiscal stimulus is not necessary. The world’s finances begins to implode tonight.
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
WEDNESDAY gold fix Shanghai
Shanghai morning fix Dec 14 (10:15 pm est last night): $ 1194.69
NY ACCESS PRICE: $1160.20 (AT THE EXACT SAME TIME)/premium $34.49

This post was published at Harvey Organ Blog on December 14, 2016.

Goldman’s FOMC Postmortem: “Faster Pace Of Hikes Reflects An Economy Close To Full Employment”

While Yellen is still speaking, here is Goldman’s assessment of what the FOMC meant with its statement:
BOTTOM LINE: The FOMC raised the funds rate target range, as widely expected. In the accompanying projection materials, the median estimate of rate hikes for 2017 increased, and now shows three hikes for the year instead of two. The statement said that the committee aims to see only “some” further improvement in labor market conditions.
MAIN POINTS:
1. The FOMC announced an increase in the target rate for the federal funds rate to 0.50-0.75% from 0.25-0.50%, as widely expected. The post-meeting statement indicated that an increase was warranted due to ‘realized and expected labor market conditions and inflation’.

This post was published at Zero Hedge on Dec 14, 2016.

Charts For a Winter Afternoon – Fed Hikes 25, Signals 3 Hikes In 2017

The Fed hiked 25 basis points today, as most everyone expected.
They also made some hawkish noises for next year, which had the dollar soaring, and the metals and stocks slumping.
Gold is now at the full retracement if this cup and handle formation is valid. More like a ladle with a pretty long handle. lol.
Let’s see where this all goes.
A strong dollar is the last thing the real economy wants, and what one might wish to see if they were Donald Trump, looking to stimulate the economy by dampening imports.

This post was published at Jesses Crossroads Cafe on 14 DECEMBER 2016.

A Looming Headwind For Small-Cap Stocks

Small-cap stocks are on a historic run; however, futures positioning could become a considerable headwind should the rally start to fade.
One of the biggest beneficiaries of the ‘Trump Rally’ has been small-cap stocks. Since just prior to the election, the space ripped 20% in 25 days for just the 6th time in 25 years (using the Russell 2000 (RUT) as a gauge). And with the RUT now back into all-time high ground – and in the midst of its favorable ‘January Effect’ season – sentiment is obviously sky-high for small-caps right now. So what are the red flags? Well, besides their obvious short-term ‘overbought’ status, there may be a longer-term potential headwind for small-caps, should they begin to reverse.
Looking at trader positioning in ICE Russell 2000 Mini futures, we note that Commercial Hedgers have just adopted their largest net short position (-57K contracts) on record, going back to 2008.

This post was published at Zero Hedge on Dec 14, 2016.

Neil Dutta: Don’t Expect Recession in 2017 With the Bulls in Charge

Though there’s been some concern of a recession cropping up in 2017 or 2018, the economic reports we’ve seen recently haven’t highlighted any immediate cause for worry.
This time on FS Insider, we spoke with Neil Dutta, head of US economics at Renaissance Macro Research, to get his take on where markets are headed and what economic indicators are telling us.
Recession Calls are Misguided
‘Those that were prematurely making these recession predictions, those arguments have lost all credibility over the last 6 to 9 months,’ he said.
Recently, we’ve seen the markets being repriced substantially after the election. In terms of economic data, we’ve seen continued job growth. Additionally, manufacturing and service sector PMIs are consistent with about 3 percent real GDP growth, Dutta stated.

This post was published at FinancialSense on 12/14/2016.

Why The Fed Is Tilting At Windmills

I grew up surfing in Southern California. Sure, I played baseball and basketball like most other boys along with a lot of soccer but these never really captured me like surfing did. I was eight years old when I first stood up on surfboard and rode a wave to the beach at Latigo Point and from that moment I was hooked. There was truly something magical about harnessing the power of Mother Nature for nothing other than the pure joy of essentially walking on water. Over the next decade I surfed as much as I could and I think those experiences taught me much of what makes up the foundation of my investment approach today.
The best surfers have a deep understanding of the ocean. They come to almost embody it in a way other athletes will never understand. It’s an internal rhythm that becomes tuned to the rhythm of ocean. Through a consistent daily routine of getting in the water surfers internally come to know when low tide will bottom out and when high tide will peak. They also know how dramatic those tides will be based on the phase of the moon. They know what the weather patterns far offshore look like and how they will create tomorrow’s surf. They also understand which beaches will best benefit due to the direction of the swell being created.
In other words, great surfers are highly attuned to natural cycles. It doesn’t take very long at all after sitting out in the water to see that waves come in to the beach in sets. The first wave comes in at a decent size followed by one slightly larger. Then a larger one comes in until the set peaks and the size of the waves begin to reverse the pattern and wane in size. Then there’s a lull in between sets before the next decent wave comes in. Over the course of the day, the overall size of the sets may grow or wane depending on the strength of the storm well offshore, out of sight. The more time you spend in the water the better attuned you become to all of these cycles and how they interact with each other to create the magic that happens when you finally catch a single wave.
A successful investor is much like a great surfer in that she studies the markets and their various dynamics to such a degree that she internalizes a great number of invisible cycles.

This post was published at Wall Street Examiner on December 14, 2016.

The Fed Just Signaled The Collapse Of The Economy, Brace For Impact – Episode 1152a

The following video was published by X22Report on Dec 14, 2016
The British member of parliament has now pushed the idea that the BREXIT was influenced by a Russian hack. Retail sales much lower than expected, during the holiday season which included black Friday and cyber Monday. Mortgage applications continue to decline, more people do not have the ability to purchase a home. Industrial production declines for the 15th month in a row. The Fed raises interest rates which signals the collapse of the economy, brace for impact. Harry Dent believes the market will drop down to 17,000 points

Fed Hikes Rates For First Time In 2016, Increases Pace Of Rate ‘Normalization’ Forecast

With 100% chance of at least a 25bps hike (and 10% chance of 50bps), this was perhaps the most ‘priced in’ of any Fed meeting ever. Of course, it is not whether the Fed hikes or not at a given meeting that matters, but rather what kind of overall hiking cycle it communicates, and so attention is focused on changes to the ‘dot-plot’. No surprise here: FED RAISES RATES BY 25 BPS, REPEATS GRADUAL POLICY PATH PLAN, but the forecast is more hawkish: FED OFFICIALS SEE THREE 2017 RATE HIKES VS TWO IN SEPT. DOTS. Of course now all eyes will be on Donald Trump’s Twitter account for any response.
December meeting rate expectqation are now:

This post was published at Zero Hedge on Dec 14, 2016.

Technician: Bursting Bond Bubble Greatest Risk to Secular Bull Market

Bullish Outlook
Dave Nicoski is optimistically predisposed to the health of the economy as stocks, the US dollar, interest rates, and oil rise together. He correlates this phenomenon to a ‘post-World War 2′ era when ‘markets reversed and broke out to new highs right around the ’45-46 period.’
‘You had a time out and then a further advance which started a secular bull run.’ He bestows his confidence on the new administration, who are ‘advocates of corporations’ and, contrary to the past 30 years, would vie to ‘keep jobs within in the country’.
He also feels that the current investment environment and Republican plan for fiscal policy changes set up a precedent for continued M&A, which should add to the bottom line of multinational corporations. He suggests that it is an opportune time ‘to get into names that you’d already don’t own.’

This post was published at FinancialSense on 12/14/2016.

World Markets On Hold Ahead of FOMC Decision

(Kitco News) – World stock markets were mostly weaker in subdued trading Wednesday. U. S. stock indexes are pointed toward narrowly mixed openings when the U. S. day session begins.
The marketplace later today gets the results of what is arguably the most important economic event of the month: the U. S. Federal Reserve FOMC meeting, which began Tuesday morning and ends Wednesday afternoon with a statement. Fed Chair Janet Yellen will also hold a press conference after the statement is released at 2:00 p.m. EDT.
Most believe the Fed will raise interest rates for the first time in a year. In fact, the Fed funds futures market shows a 100% chance the Fed will raise U. S. interest rates today. With a Fed rate hike so fully expected, markets have mostly factored it into their price structures. Thus, don’t be surprised to see many markets show a ‘buy the rumor, sell the fact’ scenario following the actual announcement of the Fed rate hike. In gold and silver markets’ case, it would be ‘sell the rumor, buy the fact.’

This post was published at Wall Street Examiner on December 14, 2016.