Tim Duy and Jan Hatzius are 2 pretty good FOMC watchers. Here is Tim Duy http://www.bloomberg.com/news/artic...need-to-give-the-fed-s-hawks-more-room-to-fly
http://business.financialpost.com/i...vid-rosenberg-hawkish-dovish-or-a-bit-of-both Good points by Rosie
Brainard: "The four features just discussed that define the new normal make it likely that we will continue to grapple with a fifth new reality for some time: the ability of monetary policy to respond to shocks is asymmetric. With policy rates near the zero lower bound and likely to return there more frequently even if the economy only experiences shocks similar in magnitude to those experienced pre-crisis, due to the low level of the neutral rate, there is an asymmetry in the policy tools available to respond to adverse developments. Conventional changes in the federal funds rate, our most tested and best understood tool, cannot be used as readily to respond to downside shocks to aggregate demand as it can to upside shocks. While there are, of course, other policy options, these alternatives have constraints and uncertainties that are not present with conventional policy.14From a risk-management perspective, therefore, the asymmetry in the conventional policy toolkit would lead me to expect policy to be tilted somewhat in favor of guarding against downside risks relative to preemptively raising rates to guard against upside risks." https://www.federalreserve.gov/newsevents/speech/brainard20160912a.htm#f14 This is why the Fed didnt move. No change in their framework, their policy is and will continue to be "better be safe than sorry"
" In today's new normal, the costs to the economy of greater-than-expected strength in demand are likely to be lower than the costs of significant unexpected weakness. In the case of unexpected strength, we have well-tried and tested tools and ample policy space in which to react. Moreover, because of Phillips curve flattening, the possibility of remaining labor market slack, the likely substantial response of the exchange rate and its depressing effect on inflation, the low neutral rate, and the fact that inflation expectations are well anchored to the upside, the response of inflation to unexpected strength in demand will likely be modest and gradual, requiring a correspondingly moderate policy response and implying relatively slight costs to the economy. In the face of an adverse shock, however, our conventional policy toolkit is more limited, and thus the risk of being unable to adequately respond to unexpected weakness is greater. The experience of the Japanese and euro-area economies suggest that prolonged weakness in demand is very difficult to correct, leading to economic costs that can be considerable. This asymmetry in risk management in today's new normal counsels prudence in the removal of policy accommodation. I believe this approach has served us well in recent months, helping to support continued gains in employment and progress on inflation. I look forward to assessing the evolution of the data in the months ahead for signs of further progress toward our goals, bearing in mind these considerations."
Also, on the BOJ front, it appears to me that the influence of Bernanke there is growing more and more evident. The ceiling on bond yields is something Bernanke directly recommended on his famous 2002 deflation article "A more direct method, which I personally prefer, would be for the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt (say, bonds maturing within the next two years). The Fed could enforce these interest-rate ceilings by committing to make unlimited purchases of securities up to two years from maturity at prices consistent with the targeted yields. If this program were successful, not only would yields on medium-term Treasury securities fall, but (because of links operating through expectations of future interest rates) yields on longer-term public and private debt (such as mortgages) would likely fall as well." https://www.federalreserve.gov/boarddocs/Speeches/2002/20021121/default.htm I wish I was more familiar with Japanese Macro, I believe there is a lot of potential for gain there as the BOJ starts to get looser and looser. Investments like currency hedged longs in JREITs or other sectors are something to consider
Over the next 12 months, a BOJ financed tax cut (helicoper money) seems to be a possibility. Either that or some variations of that (in order to avoid criticism)
Since Abenomics the Nikkei is up more than 60%. JREITs are up a similar amount. Now with the invisible hand of Bernanke guiding Abenomics, their policies should get a boost
Made some preliminary calculations. I'm up roughly 5.5% this year (give or take 1%) Biggest factors to results were: -3% PSH (already after accounting for VRX hedge gains) +2.5% EWZ/EWZS +2.5% USD Brazil bonds +1.6% GLD +1.5% UST bonds (cash and futures) I'd be up a fair amount more if I didnt miss BRKB at the bottom this year. I'm not taking into account the EWZ/EWZS capital gains that come from FX movement (which brings the return down), I have a certain amount of money in USD and some in BRL, the amount I consider appropriate. Fx fluctuations I dont consider "gains" or "losses" I'm pleased with this result so far, specially because I getting more comfortable than ever with the fluctuations. On the investing trading I regurlarly lose (that is, it fluctuates against me) certain amounts that I would consider huge for a daytrader. Yet, I care very little about those fluctutations (if it happened during day trading, I would go nuts). Having the fundamentals behind me helps me sleep well!
There is one "gain" that I didnt count, which is the interest that I receive by rolling over BRL futures contracts (effectively long BRL short USD). It amounts to +2%. I'm not quite sure how to account for this because these arent truly "gains" given the high BRL inflation rate and the risks of the country. I mean, its a "gain" in a USD sense but in a BRL sense it might not be. Nominally it is (In BRL terms) but given the risks involved and inflation, is this truly a gain? I sure heck knows that my money sitting a brazilian savings account (with just keeps up with inflation) is not really proving me with any real gain, even if at the end of the month the balance is higher The CME contracts pay just a little bit above that (10% a year according to my math)