Apparently The Fed Had A Meeting Last Month
The Fed released the minutes from their January meeting (alt) yesterday, and so far the interpretation appears to be “lower for longer” thanks to this passage: “Many participants indicated that their assessment of the balance of risks associated with the timing of the beginning of policy normalisation had inclined them toward keeping the federal funds rate at its effective lower bound for a longer time.” Keep in mind that these minutes are from the way back when; a time when we didn’t know that January was a blowout month for new jobs, that jobless claims would hold steady despite slashed energy capex, that job openings would climb to the highest level since 2001, and that unit labor costs would bounce back from 4Q. Also, spending too much time analyzing the minutes of a meeting will make you crazy. That being said, bonds rallied because markets are efficient (alt): “the yield on the benchmark 10-year Treasury note settled at 2.067%, down from 2.141% on Tuesday.” Mohamed El-Erian isn’t buying the rally: “I wouldn’t push that timetable much beyond June. And when the Fed does start raising rates…it will do so in a very gradual process.” Also, here’s something to consider: the Fed is signaling a shift towards core inflation as the most appropriate indicator of inflation. As you know, core is stripped of energy and food, which makes achieving a 2% inflation target easier when you are in the middle of a massive decline in energy prices.
“Grexit” Is More Tom & Jerry Than It Is Game Theory
Europe was getting along nicely yesterday when news broke that “the [ECB] agreed to raise the provision of Emergency Liquidity Assistance (ELA) [available to Greek banks] to 68.3 billion euros.” A hopeful Greek banker said that “assuming the present outflow trends persist, it is enough to carry us over for another week.” Okeydoke. Temporary fix; kinda like a bridge over troubled waters, no? Then this also happened: “Greece formally requested a six-month extension to its euro zone loan agreement on Thursday, offering major concessions as it raced to avoid running out of cash within weeks, but immediately ran into strong objections from EU paymaster Germany.” A super cynical German banker said that the extension request was going “in the direction of a bridge financing,” so, y’know, can’t have any of that. Meanwhile, fund managers surveyed by BAML are more swayed by loose monetary conditions than the cat and mouse shenanigans of Greece. “Eurozone exposure jumped massively to +56% overweight from +20%. This is the second highest exposure to Europe in the survey’s history.” Also, Morgan Stanley doesn’t want to talk game theory: “After four years of persistent growth disappointment, we believe that Europe is on the verge of an upgrade cycle.” Meanwhile, rumors are rumoring about that
Tom the ECB will impose cheese capital controls on Jerry Greece.
“Like-for-like sales at the world’s largest retailer rose 1.5 per cent in [4Q 2014]…’These changes will give our US associates the opportunity to earn higher pay and advance in their careers.’”