Business

Among the many consensus expectations from Yellen tomorrow is that the Chairwoman - while hiking rates by 25 bps - will cushion the announcement in extensive language explaining why this is the most dovish rate hike in history, a message which will likely be conveyed by a decline in slope of the Fed's "dots", suggesting fewer hikes over the next year.

However, that is a problem and as Deutsche Bank explains there is really no such thing as a "dovish rate hike." Here is DB's Dominic Konstam:

The Fed is “right”

 

Shortly after the Fed adopted the so-called “clean relent”, in September, we explained the dollar dilemma Janet Yellen faces in hiking rates. The problem for the Fed - and this is well worn territory by now - is that even as 25 bps might fairly be characterized as merely “symbolic”, it still marks a notable policy divergence from the rest of the DM world which is still in easing mode. 

Soaring junk bond redemptions; rising investment grade (and high yield) yields pressuring corporate buybacks; record corporate leverage and sliding cash flows; Chinese devaluation back with a vengeance; capital outflows from EM accelerating as dollar strength returns; corporate profits and revenues in recession; CEOs most pessimistic since 2012, oh and the Fed's first rate hike in 9 years expected to soak up as much as $800 billion in excess liquidity. To Wall Street's strategists none of this matters.

Submitted by Michael Pento via Contra Corner blog,

Wall Street’s proclivity to create serial equity bubbles off the back of cheap credit has once again set up the middle class for disaster. The warning signs of this next correction have now clearly manifested, but are being skillfully obfuscated and trivialized by financial institutions. Nevertheless, here are ten salient warning signs that astute investors should heed as we roll into 2016.

Yesterday, when futures were at the lows somewhere below 2000 and just above the Fib 50 retracement, we said that "bulls may have one final trump card up their sleeve: Gartman is now actively adding to shorts."