Friday, July 29, 2016

Fed Decision Election Bias INDEXSP:.INX

See Full Report

*The Fed knows there are tons of medium-term risks.
*That's why they only said "near-term risks have diminished".
*The medium-term risks did not diminish.
*One of those risks according to the Fed is the elections themselves. That's strange.
*We see no way that the Fed is unbiased about this election. That can hold off needed hikes if inflation continues. That is a stock market risk.

We reviewed an important report from the Office Of Financial Research ("OFR"). They are a government agency set up by Dodd-Frank. The Fed would agree with their report which reminds us that medium-term risks have not dissipated. We think that is the reason the Fed only said "near-term risks" have diminished. Medium-term risks have not. One of those risks is the elections themselves.
This is critical in understanding to know that the Fed is heavily biased not to raise rates this year.
Let's see what the OFR said this week (July 25th).
The U.S. Office of Financial Research released today its mid-year summary assessment of threats to U.S. financial stability, concluding that overall risks remain in the medium range but have been pushed higher by the United Kingdom vote to exit the European Union."
They are talking about medium-term risks increasing this week in their mid-year summary.
Let's look at what the Fed told us in their FOMC statement Wednesday.
Near-term risks to the economic outlook have diminished."
On July 28, we Elazarized that to mean, "The Fed saw stocks hold up after Brexit."
When comparing the OFR, we see a whole new perspective. The Fed statement really meant the following. We're now going to take both the OFR and the Fed statement and Elazarize that for you.
While the near-term risks have diminished now that stocks have held post-Brexit, medium range risks have been pushed up because of Brexit."
If the OFR and Fed don't disagree, which they don't, it means the Fed was speaking near term and left out the medium term that the OFR was talking about.
Why in the world would they do that? Medium-term risks are important to us aren't they? All commentators (except us) were hawkish after the Fed meeting. We were not, we said it was more dovish.

Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS

No comments:

Post a Comment

Comment here: