During a post-presentation Q&A in Chicago this morning, Atlanta Fed head Dennis Lockhart warned investors that Brexit is a notable risk and was a consideration within Fed policy meetings (along with every global nation's problems, we presume). However, it was his follow-up comment that has created notable chatter among the "mandate-driven","data-dependent" Fed watching community when he said that any Brexit issues "shouldn't stop the music" for The Fed.
First the AtlantaFed (with occasional shoulder-tapping exceptions) created a mini revolt in the way GDP was tracked on a day to day basis with its GDP Nowcast, one which pressured the NY Fed to create its own version (influenced by Goldman's own economic models as the Atlanta Fed's number are seen as too pessimistic), and now the same Atlanta Fed is casting serious doubt over the government's official inflation numbers, with its own "sticky-price" CPI tracker.
With The Atlanta Fed's slashing its Q1 GDP growth expectations to just 0.1%, consensus estimates for 2016 growth have collapsed. However, none of this should surprise anyone as this is the sixth year in a row that over-optimistic growth hopes devolve into hype for more stimulus and a hockey-stick just around the corner.
While expectations have not improved since 2010, at least one these dreadful soothsayers is defending this year's drop in the same old manner - by promising that H2 will be better, for these 4 reasons...
Submitted by $hane Obata
USD: Return Of The King
Falling oil prices, China growth fears, submerging markets, Brexit and Italian banks. All of those risks have one thing in common: They have not derailed the US economy. Despite concerns about a recession, it continues to grow at a steady pace. According to the Atlanta Fed, real GDP is expected to grow by 0.7% in Q1’16. That is not a great number; however, the series is extremely volatile.
sources: Bloomberg, @Not_Jim_Cramer
Someone seems to have hit the emergency button at the Fed, as even though the central bank said that everything was just fine with the American economy just a few weeks and months ago, the situation has currently escalated into a full-blown panic mode.