I don't think I'm rationalizing in this case. Most on the FOMC don't agree with Korche views on employment, he is outlining the worse case scenario for my trade, which I'm comfortable with it and its already part of my plan. I'd say is far more likely he will fail to swing the committee to his side than he will succeed but I could be wrong, if I am, I will lose 10%. Still, even the ECB is taking a 'hike and wait' type route, why Korche thinks he could convince the FOMC to go on a hiking rampage is beyond me
I dunno. Seems a crappy way to lose 10% of your net worth. Surely there are better trades out there with which to do this, ones that might offer a better upside. Anyways, the strong NFP number might provide a decent entry into FF futures today. Dudley's speech (or the questions after) will be important. He has the power to send FF spiraling down or bouncing back.
To me up to this point it all looks like the so called open mouth operations that they do as the data comes in strong or weaker than expected. I posted the ft alphaville article that laid out the empirical evidence a while back
Philadelphia's own Plosser back on the tape, saying policy may have to move sooner and more aggressively than folks expect. If this guy follows through with some dissents at the FOMC, I'll have to track him down and buy him a drink. That's 3 voters ready to hike, hike a lot, and soon. How many do the people need to stop the crazed Chair? If Dudley doesn't step in front of this thing, I expect FF futures to move a lot lower over the coming days. Even after getting slammed, they're just pricing in a 25 basis point hike in 2011. No positions, but liking my FCX puts, not liking SLV calls!
The banking crisis started when home prices plunged, well home prices are plunging now. At the very least the Fed will wait till they can see home prices stabilized before they consider starting to exit
Talk your book much, ralph ? Plosser has been a hawk forever, so his statements aren't that interesting. Fisher hasn't said anything about hikes, but talked about QE a lot. Kocherlakota is new information (and he is data-driven, as promised). The important swing voters (apart from Big Ben) are Duke and Evans and they haven't budged so far. Let's see what happens... I don't think it's a bad trade, primarily because I am catching a whiff of weakness in the whole global growth extravaganza.
I have no position in interest rates so I'm not talking any position other than that of an American saddened by our central bank blowing another asset bubble. I will be a buyer of eurodollars if they start to price in significant tightening, because it's easier to get rid of Middle Eastern tyrants than it is to get the tyrant running the Fed (backed by the tyrant running Treasury) to give up easy money. Plosser is news because he now votes on the FOMC. These guys combined take QEIII off the table as I expect Ben will have to throw them a bone to keep them from outright dissents at future meetings.
Remember Obama still has the right to appoint 2 more to the Fed's Board(The Diamond position that never fills and Warsh's position). This hawkish revolt might just get him to carefully "research" a few economics professors with dovish tendencies(Call it the White House Strikes Back) The Fed will hike when the data fits the most influential voters internal Taylor rule type framework demands for a higher than 0% rate. I see no indication that this will happen this year
SAN JUAN, Puerto Rico (Dow Jones)--A key Federal Reserve official warned Friday against moving prematurely to tighten monetary policy, saying as far as the U.S. economy has come, the recovery process remains "tenuous." "A stronger recovery with more rapid progress toward our dual mandate objectives is what we have been seeking" and have been expecting at the central bank, Federal Reserve Bank of New York President William Dudley said. "This is welcome and not a reason to reverse course." Dudley's comments came from the text of a speech he was to present before the E-3 Summit of the Americas trade forum. He spoke in the wake of the release of solid hiring data for March, and as a number of other Fed officials have been arguing the Fed is getting close to the time it will need to tighten monetary policy. Dudley is the vice chairman of the monetary-policy-setting Federal Open Market Committee, and shares with Fed Chairman Ben Bernanke the belief that the economy still needs considerable support from the Fed. He has been a staunch advocate of the central bank's $600 billion bond-buying program. Other Fed officials have been worried by rising food and energy prices, and believe with a recovering economy, it may soon be time for the Fed to move toward tighter policy. Dudley countered "it is important to emphasize that we at the Federal Reserve have been expecting the economy to strengthen." He added "we must not be overly optimistic about the growth outlook" because the economy is still working to recover from the events of the last few years. "We are still very far away from achieving our dual mandate of maximum sustainable employment and price stability," Dudley said. "Faster progress toward these objectives would be very welcome." The central banker warned events in Japan and the Middle East could prove problematic for the economy. He explained its possible higher oil prices may "cut into household purchasing power," and Japan's troubles may "dampen" growth due to supply chain issues. Dudley's take on labor markets was mixed. While he was pleased by the March jobs report, he noted hiring has a long way to go. "Although there is still uncertainty over the timing and speed of the labor market recovery, I am hopeful that job growth will increase more rapidly in the coming months," Dudley said. But he added, "even if we were to generate growth of 300,000 jobs per month, we would still likely have considerable slack in the labor market at the end of 2012." He added "the unemployment rate is much too high" right now. ---- If the hawks are lucky they get the end of reinvestment and extended period off this year, hikes?I don't think so