Rate Hike Expected... Then What?
Yellen is Bad at Being "Good Cop"
by Vince L.The
Fed announces its rate decision today with expectation almost 100% of a
rate hike according to surveys of economists. Of more interest will be
how the market digests Yellen's briefing post announcement. Will it see
this as the first of many, or "all we need"? Past experience is Yellen's
rhetoric gets interpreted lopsidedly and markets move. Then another Fed
governor will come out to counterbalance the effects of her words. Call
it good cop-bad cop.
- Fed hike of 25 basis points expected today
- Market also gives a 7% chance of a 50 point hike
- Watchers will focus more on Yellen's press conference for clues to future path
Put
another way: What Greenspan used to do all by himself (confuse markets
into submission), now takes a double team. Sometimes 2 or 3 Fed members
are trotted out to beat the market back into submission. It is taking
more and more salesmen to convince the markets of the Fed's genuineness
it seems.
Reviewing the Fed for 2016- Good, Bad and Ugly
The Good: everyone is working
The
Fed may have done a very poor job of managing market expectations in
the daily and monthly behavior of things, but their Inflation and Jobs
goals were pretty close. They may have gotten unemployment right. If you
ignore that everyone is a waiter now.
h/t zerohedge
The Bad- cherry picked statistics lie
If the employment numbers above aren't enough for you, consider the rate-hike past and future predictions.
Last
year, they predicted 4 rate hikes for this year. That fabulously wrong
guess came in sharp contrast to the Fed's seemingly spot-on unemployment
and inflation projections. Looks like we will need 13 hikes of 25 basis
points over the next 3 years.
Let's be crystal clear on Fed
rhetoric. You are being lied to and managed.The alternative is far
worse. If they actually believe their ability to predict future hikes
then there is no hope of change at the top level at all.
Nice Call Skew on the Rate Hike Plot- Can't show NIRP? Just shrink the plot STDs until it fits
The Ugly- leaders are ignorant or malignant
Economics is a soft science, and we are being lied to. Here is the reality of what we are told:
The Path towards Fed Goals is unknowable- but the Goal will be gotten to over your dead paycheck
- The path towards a goal like CPI or NFP is unknowable due to surprise events- and interest rate predictions are like recent pollster predictions, snapshots lacking sufficient data.
- The Fed can, and will get to its goals, but has no idea how the rate path to it will look- all else fails, move the goal post
- We are told things like # of hikes to give people a sound-bite- to placate us because we are not able to handle the truth
- They think we are dumb, and they feed the press info to keep us dumb by playing to the lowest common denominator- and we accept it
- In
an age of forced transparency the Academic Yet Idiotic (Intelligent Yet
Idiotic-NN Taleb) elites must obfuscate what they are forced to tell
us- mock rhetoric as "salesman wordsmithing" even while using rhetoric and calling it dialectic to lie . See: Pirsig's ZMM
Lions, Leeches and Sheep
Meanwhile
government leaders spoon feed "journalists" sound bites. Modern
Journalism prioritizes being first over being right. And we slurp it
down. If the story is wrong, the correction is buried in the classifieds
of the internet, wherever that is. Retractions are extinct. Outsourcing
blame and spinning inaccuracy have killed them.
Fed Review of the Sheeple- 2016
Rate-Hike Math
We are mushrooms to the Fed. Or if you prefer, batteries in the matrix, frogs in a pot, or just sheep.
For
example, the # of hikes is a joke. As outlined above, the Fed cannot
account for unknown events and therefore pathways to their goal are not
knowable. If they are right, they will crow about it. If they are wrong,
they will site their goal is attained despite unforeseeable
circumstances. They are right either way. And when the goal is not
attained, the books will be "temporarily" cooked. By temporarily, that
means as long as the current board is employed.
Fed Job Security Demands Avoiding Error
The headline is partially inspired by the philosopher William James who said (paraphrase): Errors
will be made in seeking truth. But many people falsely think these two
are a choice. They believe either one seeks truth OR one avoids error. But errors must be made on the path to truth seeking.
Sadly
we are now living in a world of error avoidance. How did this happen?
In part because the US citizenry believes only in the religion of
deductive logic. In banishing rumors and conjecture as truth (untested
inductive reasoning), the world of facts has killed the seed of truth
seeking. If no facts, then no truth!
But the facts are locked up
inside a politician's head or a government vault. Meanwhile we are all
still held to "provability" via facts. Facts are important obviously for
conclusions of theories. They are indispensable in scientifically
testing induced hypothesis. They separate the lunatic theories from the
sound hypothesis. The problem is, without facts, all theories are demeaningly labeled "conspiracy". There is no murder without the body.
Mushroom Management
And
who controls the facts? The same people who tell us Russia hacked us,
money is bad, one world one currency is good. The people who would have
you believe that the CIA, sponsors of failures like "Yellowcake" and
"WMD in Iraq", are using objective information to tell us Trump used
Russia to steal the election. Meanwhile, in the other corner we have
WikiLeaks' thousands of emails showing patterns of abuse, but no facts.
Who are you going to believe? Does the duck have to bite you on the butt
for it to be a duck? The Mushroom farmers.
source
You Can't Prove it's a Duck Anymore
Through
inductive reasoning, subjective (Bayesian) probability, the seeds to
search for truth are created. Then, via facts and scientific method,
those theories are tested.
Not a Duck
Our
leaders rely on this "facts-based" deductive reality to demean
conspiracy theorists. Then they hide the facts from us. Narratives are
dismissed as coincidence. All that matters are compartmentalized facts
now. The "conspiracy theorist" label lumps the loons with the real idea
generators.
Inductive thinkers historically ask the hard questions that lead to the hard evidence.
The
Press is supposed to play that part. They do not by and large anymore.
We are all inductive thinkers who see correlations in events, but do not
have access to facts to verify the idea.
That inductive or
empirical thinker wants to know if observed correlations are causally
linked. But he cannot. Because the facts are under lock and key. "It may
walk and quack like a duck, but without DNA evidence, we cannot say it
is a duck sir."
Many lawyers have said : If the facts are on
your side, argue them. If the law is, ignore/obscure the facts. If
neither are, punt until you are right.
That is why "fringe
blogs" have to repeat themselves a million times using market
observations as their data.The facts are not available. And the law can
be changed or violated at government discretion.
Tin Foil Hats For Everyone
Will
the sun come up tomorrow? Pure deductive reasoning says 50-50 chance.
This is endemic in all areas of government and especially in the central
planning circles. Probabilities are ignored, but action is expected.
Decision analysis in climates of uncertainty demands probabilistic
assessment for actions.
More people are waking up to this
intuitive part of themselves again. TheBanking crisis ripped open the
fraud in finance. TheWikiLeaks emails has done damage to the business of
Politics. The Tin-Foil hats are looking more like prophets. But never
underestimate the power of incumbent systems and their desire
to perpetuate themselves.They have plenty of tools at their discretion
like manufacturing consent, controlled opposition, and if it comes to
it, force. Meanwhile, The Fed is getting raves on its successful
manipulation of our economy.
The MSM Gives the Fed EOY Kudos
Unemployment? NAILED IT!!
Inflation? Almost There!!
GDP- Keepin' it real! but its still getting better!!
Looked
at through a jaundiced eye: the Fed can "make" themselves right in
terms of data machinations on the books. They can't lie about
transparent actions like rate hikes.expected. It is our contention that
it isn't just Corporate America that is cooking its books.The government
has a license to. But we digress.
Do You Want Fries With that Shake?
So
while the MSM congratulates the Fed for getting employment and
inflation numbers right, remember who creates those numbers. Also
remember it is the type of jobs people have that matter. Do you feel better off now than you were 8 years ago?
h/t @RudyHavenstein
We told you before, welcome to the abattoir
Good luck
full article here