Lets say the snowstorm had the impact of -50K, this is probably exaggerated. So more than 6 months after the 'end' of the recession the economy still cant create jobs. This is a jobless/inflationless recovery, not the kind of enviroment where ones needs to be worried about rate hikes. I'm far more worried about things like: EFF going to 25bps, libor blowing out to 50bps compared to fed policy. Give it 2-3 of more meetings with the extended statement in and its an almost lock there are no hikes this year
Which hawks?Just in the last 48 hours, 5 Fed members(some voters, some not) came out with either extended period support, that includeds Richard Fisher and Bullard, guys who supposed to be hawks. Hoenig is alone, the guy must have lost his voice during 2009 meetings to no avail
That's Rosie talking there. I've been meaning to mention that I recently caught up w/a college friend after nearly 20 years. He spent several years (mid 80s to mid 90s) at the BLS and I've been asking him if the NFP report is subject to political influence. In his view, there is no question that politics intrudes. He first noticed political pressure towards the 2nd half of GWB's (#1) term. It continued during the Clinton years. He has no doubt that it still occurs. The pressure is subtle - maybe little more than a meeting w/folks from the WH to discuss how adjustments are made - but it is there.
I spoke too soon, looks like the come back of the SFP is having an impact in the Fed funds market. At this point I dont know if the additional QE will counter this impact, maybe not http://www.bloomberg.com/apps/news?pid=20601087&sid=aA7dchuaWe_Q&pos=5
In theory the ceiling in the fed funds is the discount rate at 0.75% but I dont believe the NYFed desk would allow the ff go above 0.25%, which is a possibility if t-bills were to continue to crash. They would be authorized to buy USTs and they could effectively engineer a t-bill shortage by purchasing them through open market operations. So using the Jun July and August as reference the new EFF is likely to be around 20bps, maybe more maybe less. I just wish I had bailed out of my ZQ yesterday, I should have smelled a rat when EFF printed 15bps
More on PPD, including comments on the action in the stock and the options: http://www.zerohedge.com/article/ppppdppw-put-purchasing-ppd-ponzi-pyramid-or-whatever-its-called
Stock seems to have done a delayed collapse after the management change announcement. I believe the stock collapses hard within 12 months as it seems the government is serious and management is scared, we will see if this is correct
Obviously, if a cycle of rate hikes is upon us, then eurodollars are about to enter a bear market (they will start going way down long before the Fed hikes). As for once the hikes actually start, who knows, I suppose the contracts a year or more out could rally sharply at that point, ... or not. Stocks are in mid-90s mode. Any news is good news. Right now, positive economic news (which makes a cycle of rate hikes more likely) is causing stocks to be bought. Negative economic news is causing stocks to be sold for about 10 minutes, whereupon they are then bought furiously because it means the Fed stays easy. The same crew of voices who were bullish at the very top of two epic bubbles, and remained bullish through their collapse, are back again. Who could have thought we could go through the last 10 years, and these clowns would not only survive but continue to have a great deal of credibility w/the press and public. Saw this article in the NYT over the weekend by Floyd Norris. If there is any justice in the universe, its the kind of article that gets written pretty close to market tops. He's quoting Abby Cohen for chrissakes. How in the fuck does this chick continue to have a job? Its like the last decade never happened. http://www.nytimes.com/2010/03/06/business/economy/06charts.html As for the Volcker quote, it means nothing. The guy has no power in Washington. Also, his quote was not a call to remain at 0-.25% FF, it was for no big increases - a huge difference if you're speculating in the eurodollar or ff market.