Well here we are, a month after liftoff and the world's on fire again, just as it was in late August.
So far in 2016 we've seen continued pressure on crude and just as we saw late last summer, there's big trouble in little China.
Meanwhile, US markets got off to an inauspicious start in 2016 logging what for a time was the worst start to a year in market history.
The last times things were this uncertain, Janet Yellen eschewed a planned September rate hike in favor of the ultra-dovish "clean relent" as the Fed admitted that its reaction function did indeed include not just financial markets, but foreign financial markets.
On Wednesday, the FOMC stayed put at its no presser meeting (we know, we know, they're all "live" meetings now days) and here to decipher the statement is Yellen mouthpiece and seer of seers, Jon Hilsenrath.
From WSJ
The Federal Reserve signaled renewed worry about financial market turbulence and slow overseas economic growth, but didn’t rule out raising short-term interest rates in March.
The central bank said in a statement released Wednesday it would hold its benchmark rate steady for now, between 0.25% and 0.5%, and is “closely monitoring” developments in global economies and markets.
The Fed said officials still believed the economy is on track to grow, produce jobs and gradually lift inflation to their 2% target, despite worries about falling stock and oil prices and uncertainty about overseas growth. However officials were agnostic on whether the outlook has fundamentally shifted in light of developments since the last meeting, a sign of some lack of conviction about their economic forecasts.
“The (Fed) is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook,” the Fed said in a statement released after the two-day meeting.
The statement amounted to an acknowledgment the Fed could alter its plans for more rate increases this year if market turbulence and slowing global growth continue or worsen. But officials aren’t ready to commit to holding off on rate rises.
The Fed in December penciled in four quarter-percentage-point interest-rate increases this year. Investors and traders believe it will be less. If the Fed follows through on its plan, rates would rise to 1.375% by year-end; futures markets put the expected rate at 0.605% in December, meaning just one more rate increase, and even that isn’t a sure thing.
Fed Chairwoman Janet Yellen now faces a busy calendar. She is slated to testify before Congress in February. And there is a policy meeting scheduled for March 15-16, when officials will weigh whether to raise the benchmark rate again.
The Fed’s policy statement pointed to the mixed economic backdrop that officials see now.
“Labor market conditions improved further even as economic growth slowed late last year,” the Fed said. While job gains were strong, it said, consumer spending and business investment were just moderate, inventory drawdowns a drag and net exports soft.
The Fed is also trying to assess a shifting inflation outlook. Officials said they expected it to remain low in the near term, thanks to declines in energy and import prices, but to gradually rise. One worry is market expectations for future inflation are shifting down, a development officials acknowledged in their statement.
Ms. Yellen won a unanimous vote, her second straight meeting at which nobody dissented.
One challenge for officials at their meeting was deciding how to signal their degree of concern about stock-market and oil-price declines and uncertainty about a shifting growth outlook in China, the world’s second-largest economy.
After concerns about China roiled markets in late summer and early fall, Fed officials said in September that the developments could restrain economic activity and push down inflation.
On Wednesday, they stopped short of repeating that language, which would have suggested their economic forecasts were souring in light of the latest market developments.
Instead they said they were watching events closely, an echo of language they used in October. This effectively keeps their options open for the
March meeting. In declining to say whether risks to the outlook had shifted in light of market and overseas developments, officials made clear that they are struggling to assess a shifting landscape.
The Fed will update its forecasts for growth, inflation, unemployment and interest rates in March, and officials likely want to assess the tone of economic data and market developments between now and then before deciding what signal to send about the path of rates.