A few years back I wrote an article comparing buy-one-suit-get-three-free sales by Jos. A. Bank to the Federal Reserve’s quantitative easing program. Then Jos. A. Bank’s management did something absolutely brilliant: In March 2014 it sold the company for $1.8 billion to Men’s Wearhouse, its closest competitor (and twice its outfit’s size).
BofAML's Mike Cantopoulos' distaste for corporate fundamentals, displeasure with the efficacy of QE and easy monetary policy on spurring growth and inflation, and concerns that a further deterioration in credit conditions will create deeper economic troubles not appreciated by many have left credit markets with poor default adjusted valuations and little room to absorb a negative shock. He highlights nine key reasons below why BofAML believes this rally won't last (and in fact may have already seen its end).
Moments ago it was Goldman, and now here is Bank of America, which until today had expected at least two hikes in 2016 but following "a string of disappointing data", it too has thrown in the towel.
From the otherwise very cheerful Ethan Harris, so cheerful in fact that he forecasts no recession over the next decade.
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Fed call: it is a story for September
Goldman's muppet crushing ways continue.
Recall that just three days before today's deplorable jobs number, Goldman revised its payrolls forecast higher, saying that "we expect a 240k gain in nonfarm payroll employment in April. We increased our forecast from an initial estimate of 225k published last Friday as a result of the improvement in the employment component of the ISM non-manufacturing survey released this week."
Oops.
The market took one look at today's dismal jobs data and marked down the data-dependent Fed's rate-hike schedule to record lows. June odds are now at 4% - the lowest on record...
And even out to Feb 2017 there is a less than 50-50 chance of The Fed acting...