Tuesday, September 13, 2016

Yellen To WSJ: We Are 100% Absolutely Sure That We Don't Know Yet

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*We wrote yesterday that we didn't hear from the WSJ.
*They heard us and wrote a seemingly informed piece at 12:56 am this morning.
*It leans dovish but shows that the September 21st meeting is still a toss up.
*An anything can happen outcome means a hike, volatility and risk are "on the table".

"Fed has given no guidance to the Wall Street Journal ("WSJ"). Typically we hear something out of an informed piece giving unequivocal direction. We have not had such a piece. We think the Fed doesn't have guidance to give because they don't know what the outcome will be. We've now heard Fed officials come out on both sides of the fence. The meeting can go either way. That is a risk to markets."(NYSEARCA:SPY)
The WSJ heard us and confirmed our take yesterday. The Fed is divided. That is a market risk.
We said yesterday that we think this decision, "can come down to the wire."
The WSJ titled their report early this morning,
"Divided Federal Reserve Is Inclined To Stand Pat"
The issue is that the Fed is divided going into the September 21st meeting. The Fed has not given much guidance because they just don't know. They have Fed officials on each side of the fence.
Yellen Undecided
The WSJ said,
"Fed Chairwoman Janet Yellen will spend the week before the central bank's Sept. 20-21 policy meeting conferring behind the scenes with 16 officials to listen to their views and plot out a plan for the meeting. She confronts a divided group of policy makers and the potential for more internal dissent than has been common during her tenure running the Fed since 2014."
Doesn't that sound like this vote will come down to the wire? She needs to spend the week going around listening to dissenters. There are more dissenters than she's ever faced.

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