Federal Reserve Rate Hike At ‘Precisely The Wrong Time’ – Faber
Marc Faber, the editor of the Gloom, Boom & Doom Report, warned yesterday that the Federal Reserve has raised rates at “precisely the wrong time.”
Speaking to CNBC just before the interest rate decision, Faber warned that it’s the wrong time because “the global economy has decelerated very badly, and many countries are already in recession, or going into recession.”
Yesterday, the Fed has hiked interest rates from 0.25% to 0.5%.
It is the first rate hike in 10 years. And it is now clear that the Fed is not only behind the ball in terms of raising rates… but that it has now primed the financial system for another 2008-type meltdown.
By way of background we need to consider the relationship between the US Dollar and the Euro.
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