vip-atomic-bomb-observers

Significant Expectations

“When the big expected thing happens, whenever that is, it will be fully expected, and we should all be able to handle it without much trouble.  That’s been the message from a couple of richly credentialed central bankers in the past day or so, as they try to reassure investors that by the time the Federal Reserve starts snugging up interest rates, the move will be well telegraphed and will occur for the right reasons.”  Remember: the future is gradual…slow…calm.  And far away: “regardless of when the first increase comes, futures show traders don’t see rates exceeding 1 percent by the end of 2016, versus the Fed’s estimate of 1.875 percent.”  Furthermore, there is a general belief that “policy makers have consistently overestimated the strength of the economy,” which is fair for GDP, but definitely not fair when it comes to the unemployment rate.  Either way, the Fed is “optimistic and hopeful their policies are going to work the way they are intending.”  “Pessimists, however, believe the pilot is flying blindly through dense clouds with a faulty radar and constant risk of storms, making the policy normalisation process particularly risky.  ‘For me the new thing to look out for is what they do to the portfolio,’” says chief investment officer.  In case you forgot, the Fed is still flying with $4 trillion explosives on board.  “BlackRock’s Investment Institute pointed out in a recent report that a third of the Fed’s entire Treasury portfolio, about $785bn, comes due by the end of 2018…’Letting these bonds run off represents an additional tightening of monetary policy — a dynamic that may well have greater impact on financial markets than the ending of [zero interest rates] in the short run.’”  Meanwhile, Can Your Portfolio Survive Rising Interest Rates?  “The average [compound annual growth rate] for the diversified portfolio (30% S&P 500, 30% MSCI EAFE, 40% Barclays Agg) during rate hike cycles has been 8%, which is lower than the overall 12-month return of 9.7% but still quite robust…Of the eight rising rate periods since 1976, there have been zero instances where this diversified portfolio has produced a negative return.”  Also, in case you needed a reminder

 

USA: A Tax Deal That Fixes U.S. Roads?

“The clever twist is that President Barack Obama has taken boosting infrastructure spending — a favorite policy of Democrats — and tied it to a favorite policy of Republicans — reforming corporate taxes…the president wants a one-time 14 percent tax on these accounts, with the revenue earmarked for infrastructure projects, and to allow the funds to be repatriated to the U.S…the six-year, $478 billion infrastructure upgrade to highways, bridges, and public transit in the U.S. would also replenish the Highway Trust Fund.”

 

China: Mountains Everywhere

 

USA: GDPNow At 0.8%

 

USA: How Grand Theft Auto Explains Productivity Slowdown Mirage

 

Yellen: Not Going To Jackson Hole

 

Gross: Janus Global Unconstrained Is Down 3% On The Short Of A Lifetime

 

FIFA: Did You Think The NFL Has Problems?

 

What: CEO Prepares For Post-Unicorn Modeling Career Becoming A Real Business Boy!

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candy crush mascot on NYSE floor

Enamored With Easy Money The Bull

There is a strange amount of taunting going on in financial media right now.  Exhibit A: We Dare You To Try Raising Rates This Year.  “The market is essentially calling the Fed’s bluff.  Traders are betting that policy makers won’t be able to raise rates this year…’In the end, the Fed is more likely to ‘cave’ to the market as opposed to ‘fight it’ by hiking when the market does not have it priced in.’”  Exhibit B: Fed Rate Move Will Make Doves Cry.  “There are some investors…who don’t think any increase will happen this year.  It is this last group — who are likely enamored of sectors paying big dividends, such as utilities and master limited partnerships — the Fed has to worry about…If the Fed does raise rates in September, these folks are going to be surprised — and inflict a few shocks of their own on vulnerable sectors.”  But wait…what if it’s all going to be fine you guys?  “Think about it: bond yields have spiked over the past two weeks…The stock market, however, hasn’t really been hurt that much as this has been going on.”  And “the more people see examples of rising yields and a fairly stable stock market, the more this ‘it’s going to be OK’ idea slips into daily conversations at steakhouses, by water coolers, and at lunches with clients.”  Meanwhile, Jesse Livermore (of blogging/Twitter fame, not, like, real life Jesse Livermore fame…that would be weird because real life JL is really dead) has significantly changed his tone on profit margins and I highly recommend reading this entire post but here’s the key point: “dramatic technological changes of the last 20 years have made credible competition in certain key sectors of our economy more difficult, and have allowed dominant [companies] to command sustainably higher profit margins.”  He argues that barriers to competition are most pronounced “where the dominant players have pricing power,” e.g. finance, technology and health care.  In conclusion, the undead Livermore thinks “bearishly inclined investors should seriously consider the possibility that the ‘mean-reversion’ that they’ve been patiently waiting for is not going to happen, at least not to the extent expected.”  Meanwhile CHECK OUT THE GROWTH.

 

WM: More On VaR-Shocks

 

EU: Tom’s New Strategy Is Just Let Jerry Self-Destruct

 

USA: Chicago, Let Me Downgrade Ya!

 

ICYMI: Atlanta Fed’s GDPNow Is Definitely Worth Following

ps. doesn’t really jive with “CHECK OUT THE GROWTH”

 

Fed: Some Fed Economists Think Your Polar Vortex Is A Sh*** Excuse

 

WM: Algorithms Have Really Made The Markets Unsafe For Comedy

 

What: Shares Of Printing Company Rise On Rumors Of New Greek Currency

Interstellar BuzzFeed

Those Aren’t Mountains…

The “esoteric concern on almost everybody’s lips” these days is bond market liquidity: “while banks have cut their inventories of bonds, asset managers have recently been gobbling them up…But the catch is that many asset managers rely on potentially flighty forms of funding (ETFs anyone?)…If US rates suddenly rise, retail investors might flood out of bond funds…If that happens, those funds might discover the bonds are completely illiquid, or untradeable except at rock bottom prices…Thankfully, nobody expects the test to come quite yet.”  Whew!  Nice.  So, what might be driving that expectation?  “The sole bright spot is the eurozone”–this is where your lower jaw falls slightly and you start questioning the decision to keep reading this “connect the dots” nonsense — “The gap between US and eurozone growth has, for now, disappeared completely.  Overall, the growth rate of the global economy has therefore slowed further…Activity growth needs to recover markedly in the next few weeks if a generalised downgrade to global growth forecasts for the 2015 calendar year is to be avoided.”  “Like a pilot spotting a smoking engine at take-off, the US Federal Reserve is having second thoughts about when to raise interest rates…[A delay] may change the shape of the global recovery, crushing hopes for a sharp rebound in the eurozone (On the back of Wednesday’s Fed statement, the euro soared to $1.125), while removing some of the gloom from the outlook for emerging markets…The longer [the Fed] waits before cutting interest rates, the further they can go with loosening monetary policy.”  Furthermore, “emerging markets may find a surprise ally in Europe.  A stronger euro would make it harder for the ECB to meet its inflation target, [leaving them with] little option but to continue with their QE programme…But they should not take too much comfort.  Fed increases are powerful tsunamis — within hours, their effects are felt even on the furthest shores.”  Meanwhile, Vanguard says that “while you might expect the prospect of the Federal Reserve raising interest rates to put the brakes on capital inflows into emerging markets, thereby worsening their financing problems, our research suggests that doesn’t have to be the case…While financial crises have coincided with a drying up of capital inflows to emerging markets, that’s been less true of monetary tightening by the Fed.”  Getting back to the US for a minute, Gavyn Davies says the “persistent tendency for US growth to disappoint” is due to one or both of the following: “weak aggregate demand, owing to a demand-side form of ‘secular stagnation’; or a permanent slowdown in productivity growth…Ultimately, the behaviour of US inflation will distinguish between the two competing hypotheses, and the Federal Reserve will have to set policy accordingly.”  Meanwhile, “if these interest rates were to continue for 10 years, stocks would be extremely cheap now,” says Warren Buffett.  Meanwhile, John Hussman understands that using the Greek alphabet is a quick way to a financier’s heart.

 

The Latest Buzz

“The word ‘wrong’ is really good,” says a senior BuzzFeed video producer.  “Started in 2006 as a lab for experimental web content, BuzzFeed has attracted an audience of 200 million monthly unique visitors, making it the sixth-largest site in the U.S. — bigger than eBay, Yahoo, and Wikipedia…It’s known for its viral hits — jokey lists about cute animals — and increasingly, its investments into journalism.  But now, like its digital pers, BuzzFeed has aggressively expanded into video…Ideas for new ‘wrong’ videos get thrown around: Snacks you’re eating wrong.  Maybe you’re running wrong, or putting your pants on wrong…When Frank asks his team what they’re working on, they rarely tell him the individual piece they’re shooting, but rather the problem they’re trying to solve.”  Meanwhile, Twitter’s live-streaming app Periscope has taken pay-per-view piracy to a whole nother level: “Soon, viewers started to notice a trend.  If a Periscope session [got] too many ‘hearts (Periscope lingo for favorites), a stream would get shut down…This wasn’t really a problem, however, because like a hydra, we could just go to another Periscope stream somewhere else in the world to watch the fight on someone else’s TV.”

 

Global: Moody’s Has Become So Senile

 

USA: “No One Is Spared Their Side-Eyed Looks”

 

USA: The Bernanke Cat Fights Of 2015: John Taylor’s Contribution

 

What: Turns Out Goldman’s Coal Mines Weren’t A Passion Project

pocket protector

Cautious Conversations

John Williams: “I think the data show that U.S. inflation can be easily modeled in the following way: It runs about 2 percent, and then there is some fluctuation from commodity/import prices and the amount of slack in the labor market…to me it’s not that much of a puzzle that underlying inflation is running about half a percentage point below our 2 percent goal.”  Furthermore, “I don’t think [low inflation abroad] speaks in any way to whether the U.S. can hit its 2 percent goal.  We know from history that we are able to control our own inflation rate through monetary policy despite other countries having rates that are higher or lower than ours is.”  Ben Bernanke: “I don’t see anything magical about targeting two percent inflation.  My advocacy of inflation targets as an academic and Fed governor was based much more on transparency and communication advantages of the approach and not as much on the specific choice of target.”  In regards to the future of monetary policy, Ben likes a big balance sheet: “monetary control might be more, rather than less, effective if the Fed [managed interest rates] by its settings of the interest rate paid on excess reserves and the overnight reverse repo rate.”  Also, a large balance sheet “facilitates the creation of an elastically supplied, safe, short-term asset for the private sector, in a world in which such assets seem to be in short supply.”  John seems to agree: “This is a typical Fed belts-and-suspenders approach.  We’re not exactly sure how interest rates will behave and so we want to make sure that we have the full set of tools and programs…it’s a lot of contingency planning.”

 

Millennials Trust Each Other And Basically No One Else

“Nearly one in three Americans who are now having to pay down their student debt…are at least a month behind on their payments,” says the St Louis Fed.  “Delinquencies on student debt are far higher than those for other forms of consumer credit, including credit cards, mortgages and auto loans…Delinquencies are no longer rising.  But they’re not going down, either.”  Meanwhile, PricewaterhouseCoopers sees a trend in the renting “sharing” economy: “We’re witnessing the rise of companies predicated on trust among strangers at the same time as general trust in society is actually falling…Why are hundreds of thousands of people letting strangers rent their bedrooms or drive their cars if society is growing more cynical?”  The answer: while trust in individuals and institutions is deteriorating, faith in the crowd is growing.  “In other words, I don’t trust you, Random Guy Giving Me A Ride Home, but I do trust the 4.9-star average rating of all the people who’ve been in your car before.”  Meanwhile, “if you think Chris Christie’s Social Security plan is bold, you should see Team 109’s.

 

ECB: Draghi Isn’t Worried About Scarcity Of QE Eligible Bonds

 

USA: As Long As He Keeps Blogging More Power To Him

 

ICYMI: Bonds Beware As Money Catches Fire In The US And Europe

That whole velocity of money thing isn’t really playing out the way some thought…here’s another go at it.

ski patrol

Shreddin’ The Gnar

What the Fed has begun to worry about is financial stability…the longer rates stay very low, the greater the risk they become built into the current financial architecture…It is useful to think of the Fed’s mindset here as being like that of the avalanche patrol at a ski resort.  You detonate your tools in order to see if there are any avalanches out there to be triggered.  You don’t know if there are any out there, but you know the longer you wait, the larger the risks grow in probability and magnitude…the policy rate can be used to signal, to keep us on our toes, and to help clear the slopes now so as to lower the risk of triggering a larger and potentially destabilizing avalanche later.”  Meanwhile, John Williams is soooooo stoked bro : “As we go through time, that probability of saying ‘well, the shocks are going to push us back,’ seems to be [decreasing]…More importantly, we are really thinking about a path, we are talking about moving interest rates from zero to a normal level over several years.”  “To get that message across Williams has begun giving away T-shirts, printed at his own expense, showing an arrow busting upwards out of a computer and declaring: ‘Monetary policy — it’s data dependent.’”  Meanwhile, the powder abroad is DEEP dude: “investors speculating the dollar rally is fizzling out may be overlooking trillions of reasons why it will keep on going…Sovereign and corporate borrowers outside America owe a record $9 trillion in the U.S. currency…’There’ll be huge demand for the dollar that is much more than what’s consistent with growth or interest-rate differentials’…in addition, central banks that had reduced their holdings of the greenback are starting to reverse course, creating more demand…’Central banks are re-accumulating their dollar reserves and low, or negative, bond yields in the euro zone will probably speed up that trend.’”  Also, whether you are on snowboard Team Summers or skis Team Bernanke, the gnar is the same: “There’s too much money and not a lot to do with it.  And that’s why we’re seeing investors make some interesting, seemingly non-economic decisions with their piles of cash.”  Speaking of piles of cash, “General Electric’s deal to sell off real estate and get out of most of the finance business contains a little sweetener for the U.S. government, in the form of up to $4 billion worth of taxes on repatriated earnings…Right now, U.S.-based multinationals are not taxed by the U.S. government on what they earn overseas — until they bring that money back to the U.S….and there’s at least $690 billion in overseas cash…Companies can use it to make acquisitions abroad, or do what’s called ‘synthetic repatriation,’ which means borrowing against the overseas cash and giving it to shareholders in the form of buybacks and dividends.”  “Shareholders in the biggest US companies stand to receive a record $1tn in cash this year, as blue chips’ concerns over the global economic outlook have diverted cash away from investment and is driving a boom in buybacks and dividends.

 

USA: Financial Stability And Captive Reinsurance

 

China: Equity Rally Creates New Corporate Giants

Meanwhile, the “impossible” trade is working.

porky pig

A Th-Th-Th-That’s All, Folks!

Mohamed El-Erian’s portfolio is mostly concentrated in cash right now: “Central banks look at growth, employment, at wages.  They are too low.  They don’t have the instruments they need, but they feel obliged to do something…They hope that they will trigger what’s called the wealth effect…There is a massive gap right now between asset prices and fundamentals.”  “Why is this the most mistrusted bull market in recorded history?  Because no one thinks it’s real.  Everyone believes that it’s a by-product of outrageously extraordinary monetary policy actions rather than the result of fundamental economic growth and productivity — and what the Fed giveth, the Fed can taketh away.”  Meanwhile, “there are two common delusions about the Fed: [1] They know something we don’t [2] They are stupid.” Meanwhile, “there seems to be a conflict between low liquidity in markets requiring more and more predictability and the Fed wanting to have more flexibility…If economic conditions demand that [the Fed] raise rates this year it will simply have to contend with the existing, broken model.”  Meanwhile, “the easy part of the dollar rally is definitely behind us” (alt) …”On Friday, the dollar took its biggest tumble in almost two weeks following slower-than-expected U.S. job growth for March.  The Labor Department reported nonfarm payrolls grew by 126,000.  Economists…had forecast an increase of 248,000…the expected likelihood of a Fed rate increase in September dropped to 28% from 33%, according to the fed-funds futures market.”  Meanwhile, Josh Brown says “the preconditions for active management outperformance are present!”  He argues that the current outperformance of small caps over large, as well as international stocks over domestic, provide plenty of “alpha” potential.  Furthermore, “dispersion has shot up — dispersion representing the degree of standard deviation between stocks from one another.”  Also, “cash is also not as big of a drag this year as it was last year.”  “The question is, will these conditions remain present long enough for the active funds to post a (sorely needed) banner year for the industry?  It would make things a lot more interesting and could cause quite a stir here in the Index Utopia.”  Meanwhile, The Tide In Europe Is Turning Towards Active Management.  Also, Would Benjamin Graham Have Hated Index Funds?

 

USA: What Happens If My Algorithm Is Wrong?”

 

USA: [Insert Noun Here] Asian Infrastructure Bank Has Convinced Larry Summers Of One Thing!

insider tweeting

Thinking Outside Of The Box Border

Russ Koesterich thinks “the good news/bad news dynamics will get worse as the Fed rate hike draws closer.  Watch out for greater amplification of this volatility…markets will probably see more peaks and valleys this year, but for investors with a long time horizon, remaining invested pays off.”  Meanwhile, “the US, the UK and Japan all witnessed sharp equity market rallies when they launched quantitative easing (QE) programs.  The exact same thing has happened in the euro area…equities may no longer be cheap.  But we believe they still look relatively attractive when compared with regional sovereign bonds, which increasingly offer zero or negative yields.”  Also, “the ECB’s elephantine sovereign bond-buying scheme is happening at a time when the big euro area countries have negligible borrowing needs.  But euro area investors that need to own a lot of bonds — banks, insurers, and pension funds, to name a few — have to park their money somewhere.  Nowadays, ‘somewhere’ increasingly means America, in the form of US corporates taking advantage of European desperation for yield…Whether any of this will actually boost investment in the single currency bloc is anyone’s guess, but at least US companies hurting from the stronger dollar can console themselves with the easier financing conditions.”  Meanwhile, Ben Bernanke thinks “the availability of profitable capital investments anywhere in the world should help defeat secular stagnation at home.  The foreign exchange value of the dollar is one channel through which this could work: if US households and firms invest abroad, the resulting outflows of financial capital would be expected to weaken the dollar, which in turn would promote US exports…Increased exports would raise production and employment at home, helping the economy reach full employment.  In short, in an open economy, secular stagnation requires that the returns to capital investment be permanently low everywhere, not just in the home economy.”  Meanwhile, “as developing countries grow more quickly, they will also have to grow more sustainably, [so] leaders in Portland are targeting rapidly expanding cities for exports of sustainable services.  This brought them to Changsha…mayors of the two cities signed a trade partnership that will provide access to ‘green’ services for Changsha, while giving Portland firms a foothold in the challenging Chinese market.”

 

USA: Larry Summers On Ben Bernanke On Larry Summers

Also, John Hussman on eating our seed corn.

Also, Bill Gross on layups and fed funds.

 

USA: Inside Traders Are Using Inside Tweeters As Cover

 

WM: Vanguard’s New DIY Service Targets “Investors Who Don’t Need Or Want” An Adviser

 

USA: Poor Households Spend More On Prom Than Wealthy Households

 

Greece: “Q: Does The Government Have Any Rainy-Day Funds Left?  A: Not A Lot.”

 

What: HFT Firms Are Trading With Themselves To Spoof Markets

david cameron tweet

Monetary Easing Ain’t Just For Europe And Japan

“Like clockwork, every time we have seen a weak data point in the U.S. (which has been often in 2015), another central bank comes out with a rate cut and markets rejoice…There have now been at least 25 Central Bank easing announcements in 2015.  This amounts to roughly one announcement every other trading day this year…The U.S. is passing the baton, we are told, and this endless global easing is a rising tide that lifts all economies.”  Meanwhile, John Williams doesn’t think he’ll be taking August off.  Also, Stanley Fischer says “a smooth path upward in the federal funds rate will almost certainly not be realized.”  Merrill Lynch doesn’t think you believe any of this stuff.

 

Crouching Tiger

Markit’s “composite purchasing managers index — a measure of activity in the manufacturing and services sectors — rose to 46-month high of 54.1 in March (alt) from 53.3 in February…The surveys indicated the pickup in activity is likely to be sustained, with new orders rising at the fastest pace in almost four years…Germany led the eurozone’s modest pickup in the final three months of 2014…the French economy slowed.  The eurozone economy grew at a quarter-on-quarter rate of 0.3% in [Q4], up from 0.2% in [Q3].”  Meanwhile, you can hear David Cameron mumbling “We got em right where we want em…”  Meanwhile, China is all about the democratic process (alt): “China has offered to forgo veto power at a new Beijing-led development bank…the offer proved critical in getting the U.K., France, Germany and Italy to join Beijing’s Asian Infrastructure Investment Bank…Beijing is making a sharp departure from the long-standing practice at U.S.-backed international lenders such as [the IMF, where] the U.S. has a lock on some big decisions…the Obama administration has been unable to get Congress to pass additional funding for the IMF [which gives] China an opening to recruit members to its new bank…The new bank is on track to reach its target of $100 billion in registered capital, up from the $50 billion initially announced.”  Meanwhile, China is absolutely insane: terrifying-cement-cubes-in-Chicago edition.

 

WM: Reminder: Old Age Doesn’t Kill Bull Markets

Also, “A long expansion is a persuasive argument for buying stocks even though forward P/Es are historically high.”

 

USA: Unicorn Farmers Would Like To Sell Overfed Unicorns To The Butcher; Unicorns Less Excited

Meanwhile, Twitter is looking to recapture some of its glory days.

 

WM: Embrace Ambivalence, But Don’t Go Extinct

Meanwhile, the world’s fifth-largest food supplier is almost out of water.

Music Director Riccardo Muti and the Chicago Symphony Orchestra 2011 European Tour

Music To Draghi’s Ears

“In the negative-yield vortex that is the European bond market, investors are discovering just what lengths they’re willing to go to generate returns…even the most risk-averse investors are taking chances on assets and regions that few would have considered just months ago.”  Mmm, sweet melody, do continue.  “‘When you are paying some governments to own their bonds, 4 percent actually looks very decent’…European enthusiasm for higher-yielding assets has helped U.S. borrowers sell 3.28 billion euros of junk bonds in 2015, the busiest start to a year since the currency started in 1999.” …this symphony is a little heavy on the brass — “Unlike the Fed’s three waves of quantitative easing, the ECB’s version is coming as European governments are trimming budgets.  That means they issue fewer bonds, and European investors have more reason to look abroad for returns instead of paying dearly for relatively scarce assets at home or having cash in euros that they might need to pay to hold on to.  ‘There are more and more euros being printed, but these are hot-potato euros.’”  Also, “the euro’s turbocharger has been removed”: central banks around the world have slowed their accumulation of dollars and euros and are relaxing their control over their currency (i.e. float the currency).  Meanwhile, “a weak euro and signs of an economic recovery have spurred China to step up its push into Europe.  Analysts at Deloitte say depressed asset prices in the euro zone have created ‘vast opportunities for bargain seekers in China.’”  Well.  

 

Oil: US Still Gushing Oil

“US crude oil stocks rose 22% y/y to a record 458.5 million barrels during the week of March 13…refineries are working overtime to convert crude oil — which the government bans from exporting — into refined products…over the past 12 months through February, global oil supply is up 2.5% y/y, while demand is up 0.7%…North American frackers have flooded the world market with so much oil that the Saudis are aiming to shut them down with lower prices.  It’s not working so far.  The US and Canada produced 13.2mbd during February, up 4.0mbd since August 2012.  That well exceeds the Saudi’s 9.6mbd.”  Also, oil bears can smell a nuclear deal with Iran which might raise sanctions on another 1.0mbd from Iranian oil fields.  Meanwhile, Oil Rigs Shmoil Rigs (The official title of Goldman’s latest memo on oil rigs, I presume).

 

USA: Center For Financial Stability Sees Increase In Short-Term Credit

“The CFS defines market finance as the total stock of money-market funds, commercial paper and security repurchase, or repo, contracts held by financial institutions — credit instruments that are generated and traded outside of the regulated banking system.  The figure totaled $4.124 trillion in February, up from $4.111 trillion in January but 46% below its peak seven years ago.”

 

USA: Economic Surprise Index (Alt)

“The surprise index doesn’t rise or fall with the ebb and flow of the economic cycle…It measures a rolling average of how things turn out relative to forecasts…When the index is deeply negative, as it is today, that is usually a good sign for stocks.  Following the weakest 5% of observations since 2003, the S&P 500 rose by 14.4%, on average, during the following six months.

 

AAPL: Apple Has Roughly 170 Billion Reasons To Scare Their Future Competitors (Alt)

 

ICYMI: There’s A Few People Calling The Fed’s Bluff

Meanwhile, “often wrong but seldom boring” guy is done pretending.

 

What: America’s First Kenyan President Inspires Canadian To Run

Meanwhile, Asset Classes in the Obama Years

children bucket stream

Some People Are Uncomfortable With Living In The Moment Data Dependency

“Yellen took the April meeting off the table for the first rate increase, but insisted that a June liftoff was a very real possibility, and that no June liftoff was also a very real possibility.”  Meanwhile, “twelve of 16 U.S. primary dealers that do business directly with the Fed said on Wednesday they see a rate liftoff in September or later. Just four of those responding to a Reuters poll stuck with June as their forecast…‘It was primarily the downward shift in their outlook on growth and inflation’…Policy makers lowered their median view of U.S. growth for 2015 to 2.3 to 2.7 percent, from an outlook in December of 2.6 to 3.0 percent, while reducing their outlook on core inflation for this year to 1.3 to 1.4 percent, from 1.5 to 1.8 percent three months earlier.”  Meanwhile, David Merkel plots FOMC members’ projections for inflation, fed funds and GDP over time, and expects “the FOMC to continue to err on the side of monetary lenience.”  “Yellen’s response to a question about standard formulas or mechanical rules for monetary policy illustrated that her responses were not intended to be evasive, but rather to emphasize the complexity and uncertainty inherent in the economy, and that simple rules, while useful for thinking about how the theoretical economy functions in the long run, are impractical for conducting monetary policy in the real economy in real time.”  Also, “you cannot understand life and its mysteries as long as you try to grasp it.  Indeed, you cannot grasp it, just as you cannot walk off with a river in a bucket.  If you try to capture running water in a bucket, it is clear that you do not understand it and that you will always be disappointed, for in the bucket the water does not run.”  Meanwhile, it’s Markets 1 Fed 0 you guys.

 

JPN: “When Japan Post Goes Public, People Who Are Not Interested In Equity Markets Will Become Interested In Them”

 

What: “A 3D View Of A Chart That Predicts The Future”

Related: Multi-Informational, Trans-Dimensional Finance Cube