Wednesday, July 27, 2016

Watering The Fed Hike Plant, Market Risk

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*Bonds look like they can never, ever go down again.
*We think the success of bonds, credit spreads, and stock divergence will depend on one thing.
*That thing is inflation.
*We worry about markets ahead of the Fed meeting if there is any whisper (this time) about inflation.
*You never knew Fed FOMC analysis could be so much fun.
With the Fed meeting today, it appears clear that they'll raise... their language (but not rates) for a rate hike in September. Jobs bounced back after the strike. But are jobs the issue that has the Fed itching to raise, or is it inflation? There is a huge difference here, and it could be the deciding factor as to whether this tiny-yield high-equity trade continues.
We wrote that the Wall Street Journal ("WSJ") article was likely a Fed plant to say that a rate hike was "on the table" for September.
(Picture: Here's one of the Fed's plants that the WSJ was talking about. Alongside the main Fed plant are other Fed plants. We're not sure which one they bring to this week's meeting. We of course remember old photos of past Fed chairs carrying all sorts of things, like piles of papers.)
We wrote that the Fed appeared to want to warn for a rate hike for the September meeting, and they may put that somehow in their 2 PM release.
The September Fed futures haven't budged much and stand at a 78% chance that rates stay the same.
Here's the chart to say most don't believe the Fed will do anything, even in September.

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