In the aftermath of the Fed's first rate hike, SocGen's famous skeptic and "Ice Age" deflationista, Albert Edwards, who formerly called Alan Greenspan an "economic war criminal", unloads on Yellen and says that not only is the Fed's hike too late, but that the "Yellen Fed will soon be treated with the same contempt the Greenspan Fed was in the aftermath of the 2008 financial crisis."
It appears the "what the market missed" that we detailed earlier - This sets the Fed on a collision course with the market because "with the market pricing fewer hikes than the Fed suggests, someone is going to end up being wrong," - is starting to filter out to the mainstream. Despite exuberant buying in FANGs, the broad market indices have retraced the post-Yellen exuberance as bond yields fade, hinting at the market's growing realization that this could be a policy error.
Despite spoiradic algo-crazed ramps, crude oil prices continue to slide back towards a $34 handle (in Jan '16 contract) this morning following a reiterated downbeat note from Goldman warning that storage levels are "too full for comfort," that positioning is not as stretched short as some believe, and confirming that this will not end until prices near cash costs to force production cuts, likely around $20/bbl.
Positioning still not stretched short
Once again we ask The Fed, "why now?"
Bloomberg's Consumer Comfort survey found 69% of people hads a negative view of the state of the economy, netting to the 30.6 print above - the lowest since November 2014... The perfect time to hike rates?
While the afterglow of exuberance remains in stocks, BofAML's Michael Hartnett is less than impressed by what comes next...
As Fed hikes rates for the first time in 3,460 days, officially ending the era of extreme, abnormal monetary policy in the form of QE and zero rates, what do we see?
Risk assets were very oversold going into the Fed hike...they now bounce.
But the Fed hike follows significant tightening of liquidity; negative blowback is more and more visible, e.g. credit crunch causing less stock buybacks.