By Guest Blogger Doug Rowat
It’s everybody’s favourite three-letter word…so let’s talk about Fed, baby.
Like last year, it’s become the market’s most debated topic: when will the Fed raise interest rates? Currently the vast majority of economists and traders think that the Fed will raise rates at its December meeting with only about 26% market-odds that a rate increase will occur in September. I predict that the Fed raises in September, and here’s why.
The more obvious reason is that the Fed has subtly primed the market for a September hike by having both San Francisco Fed President John Williams and New York Fed President William Dudley hint recently that it’s a possibility. And remember, hints are all you ever usually get with the Fed. However, there’s more to the September argument than this.
Janet Yellen, that nice grey-haired lady who looks like a grandma straight out of Central Casting and who also happens to hold the fate of the world’s largest economy in her hands, must be keenly aware of the 30% spike in market volatility that the Fed alone created last September when it unexpectedly stood pat. While the same decision this September likely won’t create any turmoil whatsoever for the markets because guidance has been clearer, the threat of future volatility persists. The same basic ingredients that were present last year remain: strong economic data (particularly labour market data) combined with a frustratingly long period of Fed inaction. Yellen must know that eventually this is a recipe for disaster.
How unusual is the duration of the Fed’s current holding pattern? Granted this isn’t a typical interest-rate tightening cycle because the global economy remains so fragile, but it’s still instructive to know what’s happened in the past. Looking at the previous four tightening cycles, the Fed, on average, raises 10 times in a span of less than two years, so roughly one rate increase every two months. However, it’s now been nearly nine months since the last increase and the longer this goes the more the Fed risks, once again, breeding volatility.
Past US Federal Reserve Tightening Cycles
CHART 1 Source: Turner Investments, Bloomberg. Click to enlarge.
Because it’s been so long since the last rate increase, confidence is waning and market participants are beginning to question the true strength of the US economy and whether the December 2015 raise was actually a mistake. The Fed doesn’t want to be doubted and it certainly doesn’t want to contribute to market risk. If the Fed raises in September it essentially delivers on what it’s been telegraphing, albeit a bit early. Standing pat won’t affect the market much either. However, once December comes, the Fed has little choice—it must raise. Failure to do so virtually guarantees market destabilization. I’m no John Nash Jr., but it seems to me that it’s better to act now when the two available outcomes are harmless rather than later when one of the two outcomes is harmful.
One main argument against a September increase is that the Fed doesn’t want to appear to be disrupting the US election. Fair point, but Trump has created such massive disruption all on his own that it’s actually taken the political world’s only other rival disruptive force—Anthony Weiner’s crotch—to push Trump off the front page. The only thing Yellen could do to upstage Trump and distract from the election at this point is to appear at the September rate announcement naked. And Trump’s also trailing so badly in the polls that I think the Fed knows it’s not in danger of tipping the balance of a too-close-to-call presidential race.
But regardless of whether the next rate increase occurs in September or later this year, it is highly unlikely to interrupt the current US bull market. As the table above also indicates, US markets do very well overall when the Fed is busy tightening. Also, a few weeks ago, we had that rare trifecta: new simultaneous highs for the Nasdaq, Dow and S&P 500. While many see this as a sign of an overheated market and a signal to take profits, the historical facts suggest otherwise:
But back to the Fed. It’s a long shot, but I’m making the call—Yellen raises in September. I’m sure you’ll all congratulate me if I’m right and won’t say a word if I’m wrong. You’re all so sweet that way.
153 comments ↓
First!
Dougie, I am scarred from picturing Yellen showing up naked! Garth is a tame pup compared to you!
Not sure where you’ve been the past week but the Donald is pulling ahead.
http://www.breitbart.com/2016-presidential-race/2016/09/03/la-times-tracking-poll-donald-trump-leading-hillary-clinton/
Has the fed ever raised when the market odds have been this low?
#144 & 145 – Shawn
Your questions are directed at Mark, without the M. I’m Mark M., the guy who knows the Fed are a bunch bullshit artists who do nothing but create asset bubbles that eventually burst taking entire economies down time and again. It’s the case with all central banks actually.
The Mark M. who knows the Fed’s next move is a cut, and is eagerly awaiting the explanations for it from the “America is BOOMING” crowd of WalMark, The American and JP among others.
Great commercial. Pretty much sums it up!
By the way, is that Garth playing the instrument thing or the guy in the orange shirt?
https://youtu.be/yUudubg6rMY
Hey Doug what’s your net worth?
I told you all Doug would make a good comeback to challenge the high ratings of Sir Lew. This is indeed a well balanced essay that cannot be faulted. I can’t even bait the guy with a question, so say Bravo for work well done.
So what you’re saying is that if the fed doesn’t move in September –> possible market volatility. disrupts the election.
If the fed does raise in September –> possible market volatility. disrupts election.
I don’t think the average guy will be too disappointed that Anthony Weiner has lost his privilege of posting op-eds in the New York Daily News.
However ,there might be the odd bored housewife that is saddened that she no longer gets to study the inches of his column…
M42BC
I’m also the Mark M. who just read Doug’s post and is incredulous at his ability to ignore all of the bad economic data out of the US that all but ensures this “recovery” is nothing more than a bubble that is about to burst.
The US is headed for recession, the Fed’s bluster and bullshit can no longer stave off the inevitable.
After the election they’ll be cutting interest rates, it’s the main play in their book, and it fails every time.
Douglas, Douglas, Douglas…
You have to stop using charts to draw comparisons from the past when we are clearly swimming in uncharted waters.
That is unless you can show me another time in history when interest rates were at 0% or negative for a decade and the world was drowning in hundreds of trillions of dollars of debt.
If you continue to do this, you ain’t gonna amount to Jack squat !!!
If you need me I’ll be in my van down by the river.
Doug,
How can corporate profits be falling for last five quarters AND stock markets be at record highs?
There is no price discovery in these markets. None. All the participants do is wait for Fed direction. It’s all so ridiculously manipulated and primed for collapse.
Doug,
Enjoying the cool aid?
“Despite the “hawkish” intentions by the Fed to suggest they would raise interest rates in September, the weak data likely keeps them “sidelined” once again waiting for more confirmation of a strengthening economy that never actually comes.”
TRUMP caught up in the polls:
http://www.reuters.com/article/us-usa-election-poll-idUSKCN1182PT
Doug, great post. I agree. I think the Fed goes in Sept and the market likes it.
Mark M. You’ve been drinking the bong water.
#11 Mark M: Tell us what you would do if you were the FED as this I would love to see. So gives us your essay to enlighten us all.
Has the fed ever raised when the market odds have been this low?
—
Great question, Questions. I can’t answer definitively to be honest, but I will say that we’ve only had one rate increase in roughly the past decade, so we don’t exactly have much of a recent ‘rate increase’ sample size to test this.
–Doug
I’m surprised minor interest rates moves, are still such a focus of economic discussions.
Why did Volker radically hike rates. Was he not championed for crushing inflation and saving the US $ ? Why do the masses keep calling for rates to ‘normalize’?
Do the Cattle not see, the current economic environment is anything but ‘normal’?
Global Central Bank intervention after the GFC has us navigating uncharted waters. Our resistance to endure a real deleveraging cycle, mild technological disruptions (so far) and an old fashioned over supply of global labour means the West gets shite GDP growth.
So rates move 25 basis points up….Or rates move 25 points down….Yes it sends a message moving markets, but big picture it doesn’t really matter, even to people mortgaged up to their asses in debt.
The Herd needs to step back and look at the odds of real significant moves, that cannot simply be absorbed by debtors via cutting back on other spending and that would actually force parties to liquidate their homes, or miss payments on commercial debts.
The FED has displayed an unwillingness to move rates any ‘meaningful’ amount and that’s because with this crap growth, (think Volker) they shouldn’t. There is zero chance the FED rate will be up 2-3% in just a few short years with out a disruption on the scale of a: Internet 2.0 or Cold Fusion, driving sudden massive growth.
Thankfully…the US of A is growing…albeit at an anaemic rate, but businesses in BC will gladly take the scraps that are currently being thrown our way.
Come on Elon, we are all counting on you to save us…..
Much better penmanship this week Dougie, Gartho been coaching you?
Your dead wrong on the polling numbers. All of MSM polling is extremely biased…
Hillary is going to go over like a lead zeppelin on Jupiter after the first debate…
Like Man, don’t you read the zero guy….
The Fed wants to raise rates not because the US economy is booming and needs cooling (the normal reason to raise) but because they want to normalise rates so they have a lever to pull in the next recession (which is inevitable). There is no question the Fed will raise in coming months and early next year barring a stock market collapse in that time frame. The question is how long will the rates stay up going forward before cutting begins and a new round of QE is started. I suspect we will also have negative rates as some point trying to get the US out of the next recession.
Having said all that there will be the time in between where US rates do rise while here in Canada rates will likely be cut or at best stay flat. Regardless what you think about the US it is far better off than any other country and is the reserve currency. That makes the USD the place to be. The USD will also be the place to be during the next recession too. Anyone still holding CAD dollarettes should think twice. If there ever was sure thing the USD/CAD trade is it.
http://www.zerohedge.com/news/2016-09-03/trump-leads-clinton-latest-reuters-poll-were-gonna-need-another-tweak
http://www.zerohedge.com/news/2016-09-03/sorry-losers-how-fed-has-screwed-many-protect-few
Doug, brave call and I for one, hope you are correct. A rate hike now transmits the signal that the U.S. economy IS recovering. It is in fact “recovering” from the 2008 financial stupidity. A slow recovery it has been, and not without sectorial setbacks which are inevitable present in any type of environment.
Still, adding 150K jobs as reported is growth, albeit not dynamic blow the doors off growth-it IS GAIN!
From my wee perch here in the northern flyover country of the mid-west U.S. things look relatively good. People are employed, and while I certainly don’t know everybody’s individual circumstances, commerce seems active, cars are selling, tradesmen are fully booked, the bars and restaurants busy. There have been two new homes built here in the past 6 months, and resales move pretty fast. No, prices are not comparable to my northern neighbors, but we have no bubble.
Life is moving forward. Gas is $2.20 a gallon locally up a bit but nowhere the prior costs! No complaints from me. I can live off my retirement income, and even save some of it -when inclined to do so. It is summer, a time for outdoor life, and fun. We save in winter when the snow and cold is prevalent. Hey at $62 a month for heat its not hard.
Inflation is tame, just got my annual renewal on home and auto insurance, it actually went down $72 a year as we put a new roof on the shack this year. Car rates are unchanged.
A bit more interest on short term Bond earnings would be a pleasant change!
Yeah Doug, hope Yellen finds her shadow.
M64WI
#9 hope & ruin on 09.03.16 at 2:52 pm
So what you’re saying is that if the fed doesn’t move in September –> possible market volatility. disrupts the election.
If the fed does raise in September –> possible market volatility. disrupts election.
—
Re-read my post.
–Doug
Latest Reuters poll Sr Douglas.
http://www.zerohedge.com/news/2016-09-03/trump-leads-clinton-latest-reuters-poll-were-gonna-need-another-tweak
Start thinking about how to bet when the Orange Swan takes the white house.
It’s unfortunate that all that is ever spoken in regards to the stock market these days is how it will/must always go up. But then, the livelihood of the the people running and contributing to this blog depends on the market going up all the time. Any discussion of the market falling back down to reality is considered taboo.
Central banks all over the world have completely lost touch with reality, and are simply there to keep the wealth transfer apparatus working efficiently. The stock market is no longer a source of capital for innovation. The commodities market is no longer a source of financing until such time as resource extraction and crop harvesting can be completed. The markets are simply vehicles for speculation – casinos now driven by central bank action, or lack thereof.
It was once possible to use the markets as a leading indicator of the economy, but that hasn’t been the case for many years now. At the first sign of a market downturn, central banks scramble to prop it up, and have ballooned their once tiny balance sheets into the tens of trillions of dollars worldwide. Then one day an unthinkable event will occur, caused by central bank driven complacency that has motivated greedy sociopaths to take on outsized risk, system risk. Once the risk materializes, it will create an enormous domino effect that ripples through the markets and the economy simultaneously. Until then, let’s just keep discussing how the central banks have our back, and that market will keep grinding higher: “… regardless of whether the next rate increase occurs in September or later this year, it is highly unlikely to interrupt the current US bull market. ”
Financial pundits are the least productive contributors of the entire system. The don’t realize how worthless they are to system, they actually believe they are an important and critical contributor. When the downturn happens, almost all of them are caught off guard, and their only advice will be to “stay invested, because it will come back up”. Yes, it will. Eventually. Hope you’re not one of the unlucky ones needing the money before it has “comes back up”.
I enjoy when this blog talks about markets. It entertains me to read of the impeding real estate crashing one day, and an unflappable stock market the next. Like they are not connected. Only in the mind of a financial pundit.
I know this won’t get posted, but I get satisfaction from you reading it, not from me re-reading it the comments section.
Great post Doug! What’s happening with the FED is also on my mind, and influences my trades, daily, as well.
My guess is a September rate hike as well. The fundamentals and the US economy look solid enough to do it.
But I’m guessing a rate hike will NEGATIVELY affect the markets as we have a overbought condition, a very high P/E ratio and very low trading volumes. The US markets have not fully priced in a Sept hike. So I expect a 1-5% drop before November.
On to Trump.
Trump and Hillary are now neck-to-neck again in the polls. I’m predicting a Trump win there.
Have a great day,
No rate increase. No way no how. 94 Million people no longer in the labor force and most of the 150,000 jobs added were burger flippers and bar tenders. Job loses in manufacturing and high wage earning positions. Treading water is a good analogy. No rate hike.
#16 – Context
That’s an easy one Context. Do away with the Fed. Why do we need it or any central bank?
Why do we allow the market to figure out the price of pants, bananas and haircuts but not the price of money. The free market can absolutely determine interest rates, and it would never wind up at 0 or negative.
An interest rate is supposed to strike a balance between incentivizing saving and encouraging prudence when borrowing. 0% achieves neither aim.
I have a question for you and the rest of the central bank lovers here. Is the Fed the only form of central planning you like, or do you long to live in Soviet Russia?
If I were a Professor reading Doug’s essay as my student might have a problem with one of his statements. Yet its well balanced and documented based on his opinion as he’s juggling a couple of balls. Then I see a clever technique being used by shifting his hypothesis to negate my concern which he brings into play. He has effectively put my back against the wall by wisely covering his position, thus would have no choice but to give him an A+.
#15 Shawn
Terrific. Another person who’s excuse I look forward to reading on September 21.
It will be epic.
Trump has to win at least 270 Electoral College votes to become President. His gain in popular vote is irrelevant.
The same Ipsos-Reid poll that shows Trump catching up in the popular vote estimates Clinton will win 332 Electoral College votes compared to 206 for the Donald.
We know that polling is not as reliable as it used to be and upsets can occur but that is a huge gap to overcome especially for a guy that is a known quantity with nowhere left to “pivot”. He would have to shine in the debates and convince a lot of undecided voters he is more presidential than Hillary. Those are lottery ticket odds at this time.
“Voters don’t elect the American president directly, of course, but through the Electoral College, an assembly representing each of the 50 states and the District of Columbia based on the number of legislators they have in Congress. As of last Friday, the separate Reuters/Ipsos States of the Nation polling project estimated Clinton was on track to win the Electoral College, by about 332 votes to 206. Those numbers were scheduled to be updated later Friday.”
http://www.reuters.com/article/us-usa-election-poll-idUSKCN1182PT
#5 Mark M. on 09.03.16 at 2:46 pm
#144 & 145 – Shawn
Your questions are directed at Mark, without the M. I’m Mark M., the guy who knows the Fed are a bunch bullshit artists who do nothing but create asset bubbles that eventually burst taking entire economies down time and again. It’s the case with all central banks actually.
The Mark M. who knows the Fed’s next move is a cut, and is eagerly awaiting the explanations for it from the “America is BOOMING” crowd of WalMark, The American and JP among others.
//////////////////////////
Just wondering ,if you are so smart how come you chose such a similar handle to a regular poster…
M42BC
#29 Mark M.:- I would be more interested in the upper controlling mechanism and what they have to say in Switzerland called BIS.
#14 ROCK BEATS PAPER on 09.03.16 at 3:16 pm
Doug,
Enjoying the cool aid?
“Despite the “hawkish” intentions by the Fed to suggest they would raise interest rates in September, the weak data likely keeps them “sidelined” once again waiting for more confirmation of a strengthening economy that never actually comes.”
TRUMP caught up in the polls:
http://www.reuters.com/article/us-usa-election-poll-idUSKCN1182PT
—
I’m drinking the Kool-Aid?
Your response is to give me the overwhelming consensus view of the Fed that everyone knows and believes, ie, they stand-pat in September.
I gave you the out-of-consensus view, which I happen to believe, but is certainly not the widely accepted wisdom.
With respect to the polls, use Real Clear Politics, which consolidates all polls, and use electoral college results, which are more meaningful. And I freely admit, Clinton isn’t going to have an easy weekend.
–Doug
“But back to the Fed. It’s a long shot, but I’m making the call—Yellen raises in September.”
——————————————————————
The XLF and it’s members, like JPM, BAC and many others appear to be leaning to September as well.
#11 Mark M. on 09.03.16 at 3:00 pm
“The US is headed for recession, the Fed’s bluster and bullshit can no longer stave off the inevitable.
After the election they’ll be cutting interest rates, it’s the main play in their book, and it fails every time”
—————————————————————-
It’s happening in September, Dude. Deal with it. Also, the earnings recession, it’s over.
#33 Flop
Because my name is Mark Moretti.
#34 Context
Get rid of it.
Since 2014 The US Has Added 520,000 Waiters And Bartenders And Lost 13,000 Manufacturing Workers.
Why is the US economy ready for interest rate, again?
http://www.zerohedge.com/news/2016-09-02/2014-us-has-added-520000-waiters-and-bartenders-and-lost-13000-manufacturing-workers
#28 Marcus on 09.03.16 at 4:14 pm
No rate increase. No way no how. 94 Million people no longer in the labor force and most of the 150,000 jobs added were burger flippers and bar tenders. Job loses in manufacturing and high wage earning positions. Treading water is a good analogy. No rate hike.
—
Marcus, there’s an expression in hockey: don’t deke on an empty net breakaway. What’s the point?
Overwhelming odds suggest you’ll be right about September.
–Doug
Re-read my post.
–Doug
__________________________
check. will read harder in future.
Mark M
#33 Flop
Because my name is Mark Moretti.
////////////////////////////////
Yeah,fair enough I was only joshing you.
You add to the discussion but maybe I would have given myself the title…
” I’m not that Mark”
or something like that to avoid confusion,if you wanted to keep your name in your handle.
Or you just couldn’t figure out how to leave your Mark…
M42BC
#39 – “Why is the US economy ready for interest rate, again?”
Because with the Fed and their backers on this site facts don’t matter, only what the Fed says matters. Until rate hike day, when they do nothing.
Imagine watching this farce every few months for two years and falling for it every time. That’s who we’re dealing with here.
Remember to return on September 21, the excuses provided on this forum will be awesome.
With respect to the polls, use Real Clear Politics, which consolidates all polls, and use electoral college results, which are more meaningful.
–Doug
===
OK Doug.
http://www.realclearpolitics.com/epolls/latest_polls/
Saturday, September 3
Race/Topic (Click to Sort) Poll Results Spread
General Election: Trump vs. Clinton LA Times/USC Clinton 42, Trump 45 Trump +3
Blacksheep, I am somewhat on your side regarding minor moves on BOC interest rates. The bigger issue I have is that I have read several posts from armchair pundits regalling us with the current 5, 10 and 30 yr. bond rates as proof of continued low rates.
If you could envision a straight line graph of foreign purchases of Canadian bonds you would see the mother of all spikes during the Global Financial Crisis. This is what has kept interest rates as low as they are in the mortgage market. These bond traders were looking for safety and yield.
Can you envision their mindset as news of recession, housing collapse and economic woes reach their ears. Especially if the U.S.A economy is actually taking off.
Now imagine the affect their departure would have on current bond rates. We had better keep up the illusion of safety and better yield because their is no institution in Canada, least of all our government that could replace those kind of purchases.
The herd is already getting restless with the noises of correction and crash. A sudden spike in mortgage rates would make a lot of real estate real cheap for those that were actually able to buy.
My fear is that the housing crash in the States is going to be a minor blip compared to what could come our way. It’s alway best to learn from other’s mistakes. We didn’t.
#38 Mark M. :- I refer to your remark of get rid of it. This would be like getting rid of an ex-wife after the divorce settlement who took the kids. An ex-wife is like having a mortgage that can never be discharged off the title like some men have found out.
Any interest rate hike is welcomed.
A .25% helps a .5% would be more in tune with inflation.
Besides, credit card balances have been growing a bit, and auto loan as well as credit card arrears are low.
It won’t ‘do’ much to hold off any home purchasers, but it is high time we start moving to normalize rates. With inflation running about 2-2.7% why should citizens expect short term rates to be less than 3 – 3.7% as an interest rate floor? As usual, the FED is hopelessly behind the curve.
Unemployment rates are near historic norms. Yes, yes there are internet sites that tell us otherwise, but also there are sites that tell us all sorts of bologna. We tried the zero bound crap, that didn’t work long term.
We could try an transaction tax on investments, or subject them to state sales tax rates for domestic investors. (That would be much higher than say a .25% or even .5% transaction tax, but sure would be much more interesting!) Let the Banking/Investing area customers who led us into the swamp, lead us back out. After all, without the homebuyers none of this would have been necessary…
Thoughts on generating infrastructure funding here. No-one is in favor of a petrol tax raise though it is well past time for that as well.
I would also support removal of ‘tax exempt property’ like churches, mosques, universities, and hospitals we can all contribute to the plan.
I never met a TAX that couldn’t be mis-used…
#44 ZeroHedge the new WSJ on 09.03.16 at 5:31 pm
—
Electoral college.
–Doug
http://www.realclearpolitics.com/epolls/2016/president/2016_elections_electoral_college_map.html
When the Trump victory becomes evident, a horrible event will happen, as a last resort to create terror and offer the status quo with Hillary as the safe haven for the shaken, scared public.
Even that won’t work, as it did in the past and resulted in the Patriot Act (and their clones in other G-countries), wars in Iraq, Afghanistan, Syria, Libya – when crazy conspiracy theories turned out to be the shocking truth.
As Leonard Cohen sings “there is a crack in everything – that’s where the light gets in”.
“Bet accordingly” Smo Kingman.
I missed posting yesterday so……
“Full employment in the USA” HAHAHAHAHAHAHAHAHA
….and today “The Fed will waize wates in September” HAHAHAHAHAAHAHAHAHAAHAHAHAHAAHAHAHAHAAHAHAHAAHHA
@#49 Zero
“As Leonard Cohen sings …..”
*******************************************
Leonard Cohen can sing?
News to me. I always though his wheezing, monotone, wrist slashing inducing utterances the epitomy of Hell before death…….
But I could be wrong…..It happened once before…..a long long time ago…..in an elevator.
Increase the interest rate by 1/4% and affect the normal guy or tax globalization corporations – and effect normalization.
Choices…..
Greedy socialism or greedy capitalism.
Probably best to avoid both.
“With respect to the polls, use Real Clear Politics, which consolidates all polls, and use electoral college results, which are more meaningful. And I freely admit, Clinton isn’t going to have an easy weekend.”
–Doug
What a joke…..you mean all the phony MSM polls that are totally owned and doctored by Wallstreet toward Clinton? I don’t understand why you suits do not understand WHY people are so pissed off and are going to be voting in Mr Donald Trump as the next Mr President. Unless your just in total denial.
Better read Doug but two problems, Trump is doing much better than polls are reporting but may not be able to win regardless due to rigged electoral college system.
As far as Sept rate hike, Schiff says no as Yellen does not want any damping of markets going into the election. So Dec, if there is one, would be more likely he says, https://www.youtube.com/watch?v=rLaq6_xXAco
#48 Doug Rowat on 09.03.16 at 6:05 pm
#44 ZeroHedge the new WSJ on 09.03.16 at 5:31
…….
I look forward to schooling You and Ryan…Garth knows.
The debate Doug. The private polling booth where you won’t risk losing your job for supporting Trump in a PCWORLD gone mad.
I can’t believe I’m going to a culture club concert tonight. Shit you do to make Mrs Smoking Man happy.
I’ll have my buds on listening to the Handsome Family.
Dr Smoking Man
PhD Hersonomics.
Instead of all the cheerleading I’d like your estimate of how big the correction will be.
#137 Mythbuster from yesterday.
Just because Garth says “Hilary will win” doesn’t tell you what he really thinks of her.
#55 Smoking Man on 09.03.16 at 7:06 pm
#48 Doug Rowat on 09.03.16 at 6:05 pm
#44 ZeroHedge the new WSJ on 09.03.16 at 5:31
…….
I look forward to schooling You and Ryan…Garth knows.
The debate Doug. The private polling booth where you won’t risk losing your job for supporting Trump in a PCWORLD gone mad.
I can’t believe I’m going to a culture club concert tonight. Shit you do to make Mrs Smoking Man happy.
I’ll have my buds on listening to the Handsome Family.
Dr Smoking Man
PhD Herdonomics
…
Yikes.
This is why people OD on pills and jump from the Golden Gate Bridge
Anything to feel weightless again
#51 crowdedelevatorfartz on 09.03.16 at 6:22 pm
@#49 Zero
“As Leonard Cohen sings …..”
*******************************************
Leonard Cohen can sing?
News to me. I always though his wheezing, monotone, wrist slashing inducing utterances the epitomy of Hell before death…….
But I could be wrong…..It happened once before…..a long long time ago…..in an elevator.
…..
Well, my friends are gone and my hair is grey
I ache in the places where I used to play
And I’m crazy for love but I’m not coming on
I’m just paying my rent every day in the Tower of Song…
I am calling BS on Fed’s rate rise.
also, Trump will lose because of the electoral college, not the popular vote.
Everyone is afraid what is coming and will try to pull the wheel of history to a stop and keep the status quo, i.e. Hillary.
Trump is revolutionary and no one from markets, media, politicians and rich people want revolutionary, especially where you cannot bomb them to oblivion. The problem is that the ordinary people (great unwashed crowd) won’t be silenced after Trump loss. What is coming is unknown.
@48
#48 Doug Rowat on 09.03.16 at 6:05 pm
#44 ZeroHedge the new WSJ on 09.03.16 at 5:31 pm
—
Electoral college.
–Doug
http://www.realclearpolitics.com/epolls/2016/president/2016_elections_electoral_college_map.html
&&&&&&&&&@&@
Now would it not be interesting if Trump collected 55 percent or more of the popular vote and lost the electoral college?
You do know why there is an electoral college!
When the constitution was negotiated, black slaves counted for 3/5 of a person to determine the individual states electoral population and the numbers in the House of Representatives. That worked fine for the slave states. Only whites voted but the number of reps was partially determined by the number of slaves.
However there was a problem in counting the votes for President since a direct count would have favoured the freelabour states.
Hence the electoral college votes which reflected the 3/5 compromise.
#51 Fart Man
Yes Cohen can sing like Dylan, Cocker, Joplin, Neil Young. it’s all in the soul and delivery.
Please take it easy on Doug this evening…OF COURSE he has to pimp a rate hike to stay in line with the company line…I highly doubt it will and love him for at least taking a shot at predicting something that is as likely to happen as Smokie being sober after 8 pm tonight. LOOOOOOOOOOOOOOOOOOOOONG Odds….
I found two high end restaurants by the corner of my apartment dream location. One goes north and the other south but a 5 minute walk. Very nice inside but the menu caught me off guard because its unusual for this neighborhood. The menu is extensive with Polish and German dishes as recognize the names so will call them the Germanic restaurants of Toronto or Eastern European if you will. Both ownerships moved from afar and changed the name as one is owned by a top chef so they know were the classy people live because its leafy there.
I disagree and the reason you said yourself:
Granted this isn’t a typical interest-rate tightening cycle
From an economic standpoint we’re in uncharted waters, applying previous tightening cycle rules here is disingenuous.
That’s not to be a doomer. Civilization is 10,000 years old and the modern economy with our stock markets, nation states etc is really only about 100 and some odd years, post second industrial revolution (not the Oliver Twist one the American railroads etc one). So it’s not like there are golden rules here that have been around more than 3 generations. Everything changes and we could be on the footsteps of a different economic precipice in terms of growth, spending, debt etc.
We’re half-way through the average tightening cycle with a tenth the number of hikes.
Inflation is weak, the rest of the world is barely moving. There is no threat to the status quo, I see little reason to hike.
i like the stile of this young man, Doug.
he writes “I predict…” and does not hide behind the weaker “we”.
RE Bull Trap
OK, so VRE prices have moved sharply down possibly triggering the next classic stage, the bull trap. Not sure when it will begin but prices should start to rise again by say 10% before the REAL dropout happens. If so, then it is textbook classic bubble behaviour… so so of you impatient vultures out there, keep that in mind.
Anyway, I’m curious to see if this happens and if so, then perhaps it could be the last time to offload a Van property before lives get ruined.
I am up because of the likely Fed pause on interest rates. Not what I want because I have to guess more. A September rate hike and a Clinton defeat are not off the table but the odds are longer than I want. I will stay with my plan to watch and see for a couple of months.
I still see a long melt with real estate rather than a crash. As for Alberta, I see that the Provincial Government budget deficit has kept public “servants” employed. It can’t last. I am getting ready for demands to pay for their pensions never mind welfare.
Apparently, I can live in the USA full time if I don’t take one of their jobs and behave – can do. It is like BC, bring cash.
This article states that the less than stellar jobs report didn’t move the odds of a rate hike that much.
Sept down 2% to 32% chance
Dec down .8% to 59% chance
Robax,your writing style has definitely relaxed and this is your best post yet.
Your reward is next Saturday off…
M42BC
http://www.investing.com/analysis/behind-the-jobs-day-dollar-reversal-200151644
#39 ZeroHedge the new WSJ
Let’s hope they do raise it; the sooner we know what there economy is like the better, burger flippers rejoice of the powerful U.S. economy with a debt of 20 trillion and 100 million under-employed or on food stamps. No jest towards anybody working, we all have to do what we have to do.
Nice post Doug…it is a welcome diversion to have discourse on something other than our doomed real estate market.
So how do you reconcile the US and their $20 trillion dollar debt, with 1% GDP growth rate, handling the service costs with increased rates? I agree that with employment rates where they are, and inflation around 2%, there is no excuse for not raising in September. Yet…unless we see GDP growth in the 3.5% for the last two quarters of the year, increased rates can’t be supported.
Re: #37 AK on 09.03.16 at 5:02 pm
America has been in recession all year long. Negative interest rates in America by the middle of next year.
The sweat irony, Boy George the first popular confused thing to hit the stage, not knowing if he’s a guy or a chic.
The adiance is full of freeks.. His followers and desiples.
His first name is Boy…. Taboo today. Another four years if Hillary wins, you will get thrown in jail if your a George.
Destroy Culture Marxism, Vote Trump
am I the only one who can’t stop hyperventilating from laughing at this story —-> http://www.cbc.ca/news/canada/british-columbia/vancouver-real-estate-1.3746472
#56 BobC :- I gave the correction stats the other day based upon the historical wave patterns in Toronto. So if you own a condo south of Front and Yonge along the lakefront up to College going east to west you will be hit the hardest by the tidal wave. Its like being in an elevator at the top and you push the main floor button taking you down quickly.
Now one from WSJ: Walmart Is Cutting 7,000 Jobs Due To Automation…
America’s largest private employer will be eliminating positions largely in the accounting and invoicing sectors of the company. These jobs are typically held by some of the longest tenured employees, who also happen to take home higher hourly wages. Now, those coveted positions are being automated.
http://www.wsj.com/articles/wal-mart-to-cut-7-000-back-office-store-jobs-1472743429
Damn it. Boy George just did a Johnny Cash tune.
I can’t hate him now…
That’s how easy it is to get off my shit list.
#54 Baron David Rothschild on 09.03.16 at 6:45 pm
Better read Doug but two problems, Trump is doing much better than polls are reporting but may not be able to win regardless due to rigged electoral college system.
=====================
The “rigged” electoral college system is the one set out in the US Constitution which US conservatives seem to venerate. This will not stop Trumpsters from blaming his loss on a rigged system further undermining confidence in the US system.
On the other hand, if Trump wins, it will be a stunning victory for electoral democracy, whatever the eventual costs, just like Brexit. However I see a great deal of difference between the Brexit upset and the coming election.
My guess is that UK advance polling was actually reasonably accurate but the results made the “Remain” voters overconfident to the point many didn’t bother to show up to vote. As a UK friend observed, UK millennials tended to tweet about issues rather than vote.
Potential Democrat voters have no reason to feel overconfident. Trump scares a lot of people. Frightened people vote.
#69 Smoking Man
Do you really want to hurt me…
Probably the first you ever heard of… You never been to Berlin in nineteenthirtiesh, never watched a cabaret.
Or the ancient Rome and Greece for that matter.
The story is as long as mankind.
You are right about the “cultural marxismus” – though funny enough, politically correctness is the sickness of this pervert version of Capitalism, we live in…
The Foundation Capitalism?
#77 Andrew Woburn on 09.03.16 at 8:40 pm
oh, i didn’t know it was part of the constitution, i thought it was like the DNC heavy hitter thing that robbed Bernie against Clinton.
So wonder still if it has been corrupted somehow… i don’t much about it, but hopefully Trumpster can pull it off. (I really hate that killer B*tch!)
Still in bathroom
#62 common sense on 09.03.16 at 7:43 pm
Please take it easy on Doug this evening…OF COURSE he has to pimp a rate hike to stay in line with the company line…
—
I’m not even taking the company line within our own practice.
–Doug
A friend of mine was an elector for his State and said it was not rigged at all as the pledge was taken seriously but this was years ago. He also ran for the Senate and lost by a close margin so closed up his law practice out of frustration. He then took a position with the State Government as a legal advisor to get another fixed pension and hooped in all four pensions. I would say in today’s world of corruption and blackmail a pledge could be bought for enough green to throw an election.
Shit. My wife texts me Where are you….
I say I’m still in bathroom, was actuly at the bar…
And my response to her hits hear… Happens every time I’m drinking bear. . Time for uncle Jack…
Doug… Delete button in another hour or so.
Well there are 3 types of lies, in order of severity: lies, damn lies, and statistics. Polls fall into the last and worst type of lies. And there is every reason to believe that votes are really just a form of polling and thus a statistic and thus most probably a lie too. Otherwise how did we get another Trudeau? the odds of a terrible prime minister’s lackluster trust fund son getting the same job in a reasonable system defy imagination, but yet it happened. The fix is in.
But I am enjoying the commentary coming from Scott Adams on this US election. He’s made several interesting comments on the use of persuasion and the lack of facts surrounding this election, but he also made another very keen observation: Both candidates, Hitlery and the Donald, are too old to be applying for a job that potentially has an 8 year commitment. We should be paying much more attention to the VP’s they have selected.
There is a constitutional rule in the US that a presidential candidate must be of 35 years of age (or more). There should be an amendment also specifying that they must be 4 (or maybe 8) years from mandatory retirement.
Murdering your own liver is So under rated.
#125 crowdedelevatorfartz (yesterday)
I’ll give you that I don’t know if Hitlery or the Donald will win, but if we go to nuclear war at this point the planet is done for supporting life for a long time. Do some research. All scientists except creation scientist (who think Dog will just fix it) agree that this is the case. This was already accepted when we were talking about Carl Sagan’s “nuclear winter” well before all the nuclear waste built up over the years. The world is already covered in “background radiation”, some of which is natural but most of it is a result of the nuclear testing done before the above ground treaty ban. That testing used 10’s of tons material. In storage now we have thousands of tons at each reactor.
Like the abbreviation you used for me though, I might adopt it.
#129 Hotdogs from Heaven (yesterday)
We’ve been living with this increasingly deadly threat for a long time, and so far the missiles have stayed in the silos. However there is a reasonable case to be made that your suggestion might be appropriate. On the other hand, if the missiles stay in the silos for another 70 years you will need the savings. My point is we need to keep the missiles in the silos, they cannot be used anymore, and all the adults in the room know that. All those nuclear armed submarines are at this point just a big waste of money, they can’t be used.
I read job numbers lower in the U.S. also because of people retiring.
So if you get in a bus and there’s no driver….
DELETED
Trump is trailing badly in the polls, is he? Maybe those are the same polls that beaked off endlessly that Brexit was an impossibility. We live in an age where common sense is ‘trumped’ (pardon the pun) by herd mentality. The ‘herd’ unfortunately is mostly comprised of people who worship the likes of Kim Kardashian, Kanye West and the ‘Biebs”. We are living in a vacuous culture of celebrity. Donald Trump fits right into that mold. Critical thinking has checked out and been replaced by a world that validates itself by excessive consumerism. Easier to focus on the next purchase than think about where one is headed in life. ‘ I feel bad about my job prospects so maybe I will just go out and buy a brand new SUV so I can transfer all those new shiny feelings to my sense of self esteem’. Mercy. We live in a culture of instant gratification. And we live in a drug culture that is our biggest crisis of all. Nobody seems to be noticing, but folks, it’s on your doorstep. Strap yourselves in. Good thing we still have those underground shelters from the Cuban Missile Crisis, cause we are going to need to retreat into them. A thoughtful person might sit back and think it impossible that Trump could be elected if for no other reason than the assurance that the ‘military industrial complex’ would never let it happen. But if that were the case Trump would never have made it to the Republican Convention to be the nominee. Or maybe Hillary is so deeply in their debt the choice of party no longer plays into the equation.
With mainstream media under the thumb of the aforementioned ‘military industrial complex’ it’s impossible to know what job numbers really mean. Probably not full time jobs, probably fudged numbers.
If you really want to know what’s going on just listen in on the conversations around you. Lots of “news” never makes the news if you know what I mean…
Doug, you are obviously a very smart cookie. But intuition is less about numbers and statistics. It’s more about spotting the footprints in the snow, the broken branch, and all that other stuff that bloodhound types are born into…
So many delusional Trumpkins looking for the truth at Zero Hedge. It’s a Russian propaganda outlet, nothing more-nothing less. Read something else Trumpkins. The truth might set you free.
http://bulgariaanalytica.org/en/2016/06/26/zero-hedge-вече-и-за-българска-употреба/
DELETED
Too much distraction over popular media issues. The latest being T Ball Trudeau standing for a oddly angled selfie on the Great Wall of China railing against Trump building a wall when it worked pretty well for the Chinese at the time.
Bottom line , governments have borrowed trillions they can’t repay and have interfered with the capitalist business cycle to the point where ‘growth’ can’t regroup from under the boot of government . Don’t blame slow growth , blame idiots like T Ball for laying down barriers to progress.
When you figure out friends are not real.
https://youtu.be/sMqNFAU0tOw
My teacher
https://youtu.be/YR5ApYxkU-U
#91 Smoking Man on 09.03.16 at 10:17 pm
DELETED
————————-
Listen to me, Butterfly, there’s only so much wine
You can drink in one life
But it will never be enough
To save you from the bottom of your glass
# Smoking Man
My teacher
—–
My teachers
https://youtu.be/8FDt180GgO0
From yesterday, addressed to “Mark M.”, but really should have been addressed to “Mark”.
“How does $800K invested in the TSX yield $53K after tax? Are you making assumptions about future returns based on historical statistics and p/e ratios (i.e. risk adjusted return)? The dividend yield on the TSX is 2.7%.
The E/P ratio of a stock is the stock’s earnings yield. Over the long term, all returns from a stock arise from earnings, with earnings eventually paid to stockholders. Thus, the return of the stock market can be generalized as:
Return = E/P + earnings growth rate.
So historically the P/E of the TSX is around 17, giving an E/P of 5.9%. Earnings of the stock market indices tend to, over the long term, approximate nominal GDP growth, ie: historically around 4-6% in Canada.
Hence, Return = 5.9% + 5% ~= 11%.
If you look at the long-term total return of the TSE/TSX indices, this is basically what you end up back at over the long term. A roughly 10%/annum nominal return.
Why are you bullish on the TSX but not the S&P500? I think you’re bearish on Canadian real estate… Do you forsee this hurting bank earnings, thus hurting TSX earnings (banks are 37% of the TSX)?”
While bank earnings will likely be subject to more volatility than seen in past episodes, I believe a fall in the housing market is generally positive for the Canadian big-5 banks. Why? Its pretty simple:
1) A falling housing market implies rising risk premia specifically for housing related loans as the lending community becomes more concerned with defaults. We’re already seeing this, with housing-backed and consumer loans facing widening spreads against “risk-free” benchmarks such as the BoC policy target rate and the GoC bond at equivalent points on the curve.
2) Housing is a systemically significant asset class, with over 70% of Canadian families participating in the housing market as owners. Thus even relatively minor equity losses in housing, as experienced now, can have fairly dramatic impacts on aggregate human behavior. For this reason, and in the absence of other demand drivers, the BoC will be forced to run very accommodative policy including ZIRP, and perhaps even NIRP.
Low funding costs are excellent for the banks. In ZIRP, with free money, practically any sort of loan can be extremely profitable. Mathematically, if the cost of goods sold is $0 (ie: the banks can borrow for nothing), the margin is infinite.
3) Nearly all at-risk housing mortgage loans in the Canadian big-5 banks are CMHC insured. CMHC subprime mortgage insurance can be thought as a sort of “put option”, guaranteeing the repayment of the loan at the strike price of the put option, ie: 100 cents on the dollar. As housing values drop, that put option, on a mark-to-market basis, becomes increasingly valuable. Much like a put option on a stock increases in value as the price of the stock drops.
4) Smaller provincially regulated institutions (ie: credit unions) are likely to have significant problems going forward given over concentration in regional and sectoral asset classes. This means that the big-5 should have greater opportunities to pick up business lines that they are not able to cater to with their wounded balance sheets.
5) The Canadian big-5 will have plenty of opportunities to participate in restructuring financings, debtor-in-possession, and other distressed asset financings that can be highly lucrative in a housing-led economic downturn. The returns can be extremely lucrative, and banks typically have the “inside scoop” on participating in these financings.
6) The Canadian banks will likely be quite busy being the investment bankers to a disproportionate segment of the world’s precious metals producing companies which are likely to perform well on account of global macro trends. Again, another positive.
7) Wealth management should grow nicely as people once again start getting serious about investing in financial assets for retirement instead of in housing. We know that many Canadians are severely over-allocated to RE, and under-allocated to non-RE retirement assets.
8) P/E multiple expansion should occur for the banks for similar reasons.
Similar factors drove the big-5 to returns of 300-500% in the period 1990-1998 before Finance Minister Paul Martin put a kibosh on proposed bank mergers. I don’t see why there can’t be a repeat of such. As always, a balanced portfolio is important, but Canada’s big-5 should do quite well in a falling RE price economy.
Even with 10 increases to the prime rate it’ll only be 2.75%, for the US investor you shouldn’t worry until its about 3 or 4%. Keep your eye out for the inverted yield, where the 2 year is worth more than the 10 year US treasury. If that occurs you have about 6 months to duck for cover. You should be moving to defensive stocks when there is a 50 basis point difference between the two. Canada is already moving towards a self inflicted recession. Look at their 2 and 10 year bonds and you’ll see we’re in trouble.
One thing that caught my eye when I was on investing.com looking at that story I posted at number 68 .was down the sidebar there is a list of a heap of countries and when their central bank is due to meet next.
I understand they have ongoing meetings but why would so many of the countries bother meeting before the U.S Fed if that’s who they are looking to do the heavy lifting most of the time.
New Zealand looks like the only ones smart enough to have a meeting scheduled the next day to go over the ramifications of a U.S Fed decision and how it affects their narrative.
Australia,Canada and Europe all seem to be wasting everyone’s time.
It’s official, New Zealand is the new financial capital of the Southern Hemisphere…
M42BC
Here’s the list for the lazy ones…
M42BC
Central Banks Rates
Central Banks Interest Rates Next Meeting
FED 0.50% Sep 21, 2016
ECB 0.00% Sep 08, 2016
BOE 0.25% Sep 15, 2016
SNB -0.75% Sep 15, 2016
RBA 1.50% Sep 06, 2016
BOC 0.50% Sep 07, 2016
RBNZ 2.00% Sep 22, 2016
BOJ -0.10% Sep 20, 2016
CBR 10.50% Sep 16, 2016
RBI 6.50% Oct 04, 2016
PBOC 4.35%
BCB 14.25% Aug 31, 2016
Personally, I’ve had my crow dinner when the rates were risen the first time. Never thought they would dare, since the compounding math states clearly: either the rate must fall, or the time must rise, in order to keep the credit expanding: You_Owe = Principal *(1 + rate/number_of_compoundings)^time. I suspect they missed that equation when they raised, since they most likely mistaken the equation for a profit equation -very easy mistake to make in a credit expansion- (i.e: You_will_certainly_get=Principal*(1 + rate/number_of_compoundings)^time
So, I’m making the call that the rates will no longer be raised by the holy temples of promises. The rates will be raised by panic next time. I’m determined not to eat crow anymore, tastes awful :)
My guess is no rate hike in September. If there is one, I am going to be looking at selling various positions. The markets always seem to sell off after a rate hike and this time around, we also have spooky October.
Spooky anything in the markets is not good. Even if there is no logic to be spooky…… it will be spooky.
Indicator wise rate guidance for Fed.
As per:
– NFP data: Raise in Sept.
– Unemployment rate: Raise in Sept.
– Business spending: Wait till Dec.
– Consumer spending: Raise in Sept.
– Inflation rate: Raise in Sept.
– GDP growth: Wait till Dec.
I’m betting on a rate raise in September. If they don’t and Cheeto wins in November, they won’t get another chance.
Well Smoking Man, you may get your wish for a Trump presidency. Still think he is civilization ending but I am not an American voter and let their will reign supreme.
RealClearPolitics posts all major polls not just those from the left or right. Stop posting from that angry disenfranchised gadfly Millennial at ZeroHedge, biased beyond words and gleeful of others’ misfortune…hardly a source to be associated with.
RealClearPolitics Polling Data (Trump turnaround ought to be obvious even to a lefty but still behind Hillary – still 12% of voters are uncommitted…hope for Trump after all):
http://www.realclearpolitics.com/epolls/2016/president/us/general_election_trump_vs_clinton-5491.html
RealClearPolitics Electoral Map with Toss Ups (Trump/Pence at 154 committed electoral college votes for past month, yet, 155 electoral college votes up for grabs which could give them a win with Hillary at 229 committed):
http://www.realclearpolitics.com/epolls/2016/president/2016_elections_electoral_college_map.html
RealClearPolitics Electoral Map No Toss Ups (Trump/Pence gained 22 electoral college votes in the past month alone, still way behind at 340 vs. 198):
http://www.realclearpolitics.com/epolls/2016/president/2016_elections_electoral_college_map.html
This Trump surge almost miraculous. Wall Street has already impounded a Clinton landslide…well, well, won’t they be surprised if this Trump surge has traction and continues.
For the record, I called Trump as the next US President last fall when he announced. Do not like him but I am not an American voter. Truth is the truth, he surging and may yet win. The numbers are there for the taking…
#19 Smoking Man on 09.03.16 at 3:47 pm
Much better penmanship this week Dougie, Gartho been coaching you?
Your dead wrong on the polling numbers. All of MSM polling is extremely biased…
Hillary is going to go over like a lead zeppelin on Jupiter after the first debate…
Like Man, don’t you read the zero guy….
01010101010101010101010101010101
The Zero Guy’s good , but the Druid Dude’s got it nailed.
http://thearchdruidreport.blogspot.ca/
Doug,
Good article and good points.
The odds are 26% and the Fed can deliver if they want for the reasons you laid out. Odds were higher before and the Fed disappointed. Clearly anybody’s “odds” are not driving the Fed itinerary.
This market however has that 2007/2008 feel all over again. Staying long is a gamble and going longer at this juncture is potentially a financial Kamikaze mission. Especially if the longs are digging deeper into leverage.
Vancouver RE is a good analogy. Long term bets bought on cheap leverage into a quickly eroding and illiquid market are going to cause cases of extreme hardships. Several Vancouver RE specuvestors are going to learn the hard way. The party has stopped.
The lending into this market is getting more and more scrutinized and harder and harder to obtain. Started around mid 2015 already and the screws were just tightened more and more since. Neither banks nor private lenders want to be holding the bag.
Fed is going to raise in September. BoC holding. World will not end but portfolios will get restructured.
Could be HILLARYEXIT:
http://www.newsmax.com/Surveys/Results/id/323/
#70 WallOfWorry on 09.03.16 at 8:24 pm
Nice post Doug…it is a welcome diversion to have discourse on something other than our doomed real estate market.
So how do you reconcile the US and their $20 trillion dollar debt, with 1% GDP growth rate, handling the service costs with increased rates? I agree that with employment rates where they are, and inflation around 2%, there is no excuse for not raising in September. Yet…unless we see GDP growth in the 3.5% for the last two quarters of the year, increased rates can’t be supported
—
I don’t think Yellen would have said that the case for a rate-hike has strengthened in recent months, if one weren’t coming this year. So we have to figure out when. Three meetings left. I’m simply saying it comes in September. Whether the US economy can handle it or not is another discussion.
However, GDP growth is slow, not negative, so the pace of rate increases is going to be slower as well. But they are coming.
–Doug
Like a Seinfeld episode…a post about nothing.
What rate hikes? Bring on the Second Coming first.
Take everything said by our elites in the control system backwards: War of drugs, War of poverty, War of terror, war to begin all wars. (How’s all this working out.)
“It’s a long shot, but I’m making the call—Yellen raises in September. I’m sure you’ll all congratulate me if I’m right and won’t say a word if I’m wrong. You’re all so sweet that way.”
Bill Gross of Janus Capital also thinks the Fed will raise in September.
How about a Friendly bet then Doug? If the Fed hikes in September, you can enjoy a Filet Mignon on Garth’s tab at the local steakhouse (Garth I hope this is okay — if not then maybe a steak sandwich at the local pub or breakfast at the local greasy spoon), and if they don’t, a dip in the lake in your Speedo and a pic on this blog to prove it!
Will it be a victory meal or a cold bath for Mr Rowat?
Smoking man to get over your Boy Culture hangover click here https://www.youtube.com/watch?v=g05NO2ZBYCY
( Carson Downey Band ) from of course Preston N.S.
If you have A.D.D. jump ahead three minutes, if it is severe, jump to minute nine and count the fingers in the strumming hand. I sat on the right wing of the stage at the free concert, in the marina parking lot in Digby enjoying this guy last night. Corona (Mexican word for Miller) $5.75.
Every one else can also benefit from seeing someone probably new to them while the markets are closed.
To the poster that asked yesterday, the beer tank is gone but there are various outdoor beer gardens now
To the other poster, about Bear River, I ‘get’ Bear Town with its Granola eating draft dodgers, but I am more of a French shore kind of guy.
Thanks to Garth informing us about ViewPoint.com I steered a friend into the purchase of an old abandoned homestead on Lewistown Rd. in Ashmore, 38 acres for 15 grand just last month. The guy has the tidal waterfront lot a mile down that gravel road and across the highway, needed a woodlot, and ended up with so much more. Thanks Garth!
And speaking of Harleys, how about a 107 cubic inch with air ride and a 26″ front tire. Times are changing.
and oh yeah, saw a thug sporting a tee shirt with a front that said ‘Cop Sickle’ with an arrow pointing down, would like to change that to the back saying ‘Fed Sickle’ with the arrow pointing down,but would the sheeple on the street get the drift?
Painful attempt at Garthism there. Comedy is subtlety and timing. The reader’s mind should finish the story drawing, too on shared cultural references.
I’ve no idea what the mainstream story is here in first section but this should be something like: imply flaccidity , then wrinkles:
…
….disruptive force— Anthony Weiner’s flip flopping —to push Trump off the front page. The only thing Yellen could do to upstage Trump and distract from the election at this point is a major wardrobe malfunction at the September rate announcement . That’ll buff right out.
Why doesn’t anyone here look at bond yields or the ISM and then tell me how there isn’t a recession coming?
Seriously you just listen to Janet Yellen and the Garth crew and ignore actual data?
No rate hikes this year or next. The Fed will be cutting rates before long.
Thing about Trumpkins is that they think they are smart. Trump is their spiritual leader. Trump is a master player Trumpkins. And you are being played. He’s going to build a wall. Clever. He is selling you Trumpkins something that’s already there. That’s smart. Trumpkins are so sad.
http://thehilltalk.com/wp-content/uploads/2016/03/image.adapt_.990.high_.border_fence_073014.1447285468870.jpg
I just tested that link and realized that the camera on that video is not set fast enough to catch all of the strum hand movement. It looks like he is doing a poor job synching a pre-recorded track because his hand moves faster than the pixels compute!
Interest rates need to rise because of the millions of pensioners and pension funds not making anything in their investments. ZIRP and NIRP are only weakening demand and will continue to do so in the future. It also projects a lack of confidence. Almost 10 years later into this recovery, is it a recovery or not? It feels like purgatory.
If you have a killer business to open up, I don’t think whether the overnight rate is .5% or 1% is going to make a difference. But it will project confidence which can have a positive psychological impact.
I would personally rather see asset bubbles popped and debt growth curbed because that is only going to hurt the economy is the long run.
#110 Debbie Doublechurch on 09.04.16 at 8:50 am
…and if they don’t, a dip in the lake in your Speedo and a pic on this blog to prove it!
—
We lived through a recession last year. Hasn’t Canada suffered enough?
–Doug
Why can the pundits not admit that the world is changing?
We can no longer apply economic models and theories developed and based on what has transpired over the last 80 or 90 years. Empirical evidence is short term and situational. The rules no longer apply.
We, in North America and Western Europe, have had a good run.
It’s all slowly grinding to a halt. Like a super-fast train with its brakes on rolling into a station. It seems to take a long time, but it will eventually stop.
The inherent demand in the system that used to exist has peaked. The people of the world that can actually afford stuff simply want and need less.
Things will get a lot worse before they get better. Likely not in our lifetimes. Or at least, not before we’re too old to care anyway.
It’s futile to believe things will ever get back to the way ‘they used to be”. Accept it. Adjust and adapt.
The three basic facts of all existence are:
– Impermanence or Change
– Suffering or Unsatisfactoriness
– Not-self or Insubstantiality
“Better it is to live one day seeing the rise and fall of things than to live a hundred years without ever seeing the rise and fall of things.”
We’ve seen the rise. We’re seeing the fall.
@#59, 62,
No, Leonard Cohen is a tone deaf bore.
Dylan hung out with Woodie Guthrie then ripped off his “sound” .
“Knick Knack Paddy wack,
Give that dog a B-o-o-o-onnnne”
Then cut to a wheezy , tuneless, harmonica.
Its confirmed, Im really dead and in Hell listening to endless Cohen and Dylan songs…..
Ugh.
Dr. Seuss wrote better poems.
Cohen and Dylan….. 60’s hacks that relied on their audiences drug consumption to tap along with the “music”.
Cocker, a tad twitchy but good.
Joplin, way ahead of her time.
Young, great music, but his voice is like a Russian ice pick to the ear drum a la Trotsky.
#118 nailed it
@# 105 drydock
Re:http://thearchdruidreport.blogspot.ca/
++++++++++++++++++++++++++++++++++++
Great link.
One of Greer’s comments was too good to pass up.
“I suppose its probably too late in the game for both of the parties to do the right thing and swap candidates, so that the Republicans can go back to running a corrupt establishment neoconservative and the Democrats can field a libertine populist demagogue. Lacking such a sensible move, it’s not at all surprising that so many people have basically gone gaga, as Democratic and Republican voters try to convince themselves that they really do want to vote for someone who’s literally everything they least want in the Oval Office. That degree of cognitive dissonance does not make for calm discussions, rational decisions, or sane politics…..”
Classic observation.
#119 crowdedelevatorfartz on 09.04.16 at 9:52 am
@#59, 62,
No, Leonard Cohen is a tone deaf bore.
Dylan hung out with Woodie Guthrie then ripped off his “sound”
—
Lucky for you, there is no confusion about your gift to mankind, it fills the elevator with pitch perfect tone, leaving people with your legacy.
On the Least Coast this week – where the price of a Shttyplace condo buys small manse.
…
Meanwhile in Context’s soon to be Ground Zero of condos, mayhem (feel like walking up/down 40 stories?)
http://www.cp24.com/mobile/news/toronto-hydro-power-to-be-restored-to-cityplace-residents-by-noon-sunday-1.3057811
Since 6:30 p.m. Saturday, nine buildings in the area bounded by Front Street, Lake Shore Boulevard, Bathurst Street and York Street have been without power and the outage is the fourth one in the last two weeks.
Garth…did you force Doug to the podium to predict the Fed raise because you are afraid of the Pitchfork Steerage Class?
The tomatoes came flying fast.
I am rooting for you to be right this time, only because down here in steerage the mob is getting antsy. The Trumpers, 2nd Amendment guys with their AR-15’s, Gold Swashbucklers, Redoubt guys with bunkers and stockpiled squirrels.
The comments section is looking like a Cosplay Convention outside the Bastille just before King Louis got thrown out.
Better buy a frag jacket Garth.
@ #118 Zen Headspace on 09.04.16 at 9:38 am
Are you talking about the markets or what? What about that whole Zen investor thing you had going on, about staying invested over the long term?
Doug, sorry to break it to you…. we will painfully remind how wrong your prediction is or remain silent while linking our wounds if you made the right call.
Much easier read this time
@#86 non+
I’m aware of Sagan’s “nuclear winter” theory as well as the overabundance of planet killing missles in silos.
I just dont think that this election will be the armaggedon you think it is.
I’d be more worried about an international skirmish in the South China Sea escalating all out of proportion to its actual importance.
China’s “sabre rattling” about its “historical ownership” of those waters basically slaps, Japan, the Philippines, Vietnam, Taiwan, India, Australia, the US right in the face.
Building radar installations on man made islands on submerged reefs and then declaring it soveriegn Chinese territory flies in the face of a recent internatinal court ruling banning such actions.
http://www.google.ca/url?url=http://qz.com/733012/it-is-beijings-fault-that-china-lost-big-in-the-south-china-sea-ruling/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjv18PR_fXOAhVP0GMKHeGyD-IQFgglMAM&usg=AFQjCNEf6m7r9Qgj36NEnfnkbHVnpbdrsQ
Chinese “fishing trawlers” escorted by coast guard ships ,entering areas traditinally considered “local waters’ by other nations and then vacuuming up everything in sight doesnt bode well for “peace and harmony”
China’s experimentation with missles they have dubbed “Aircraft Carrier Killers” also doesnt bode well for peace and harmony when one considers the US is the only “Blue Water” navy that relys on carriers to expand their sphere of influence….
http://www.google.ca/url?url=http://www.businessinsider.com/us-answer-carrier-killer-missile-2016-7&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjvuNj7_fXOAhUT2WMKHed1AkkQFggeMAE&usg=AFQjCNFsTNWZ3UDr80Le-RXwVgxS2nV3wQ
China.
A country that for decades has seethed at its subjucation and snubbing by 1st world nations due to its lack of tachnology and money…..now has both in abundance and intends to use them.
Lets just see if the “newest” rich kid on the block with the most expensive toys doesnt turn into a spoiled, boorish brat that has a tendancy to shoot first and worry about the consequences later….
http://www.google.ca/url?url=http://www.aljazeera.com/news/2016/09/awkward-g20-start-china-tarmac-row-160904062800075.html&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjika-f_vXOAhVP82MKHW1pCNMQqQIIFzAA&usg=AFQjCNFgaskYXvuf0wXP16M3uYGR1X1JcA
Chinese pride and tendancy for their govt to resort to nationalist rhetoric when their population is unruly has worked in other countries for years. Nothing like blaming “others” for your problems….gets the publics attention off the crappy decisions made by their own leaders.
You may want to enrol your kids in Chinese lessons…..
Yep . interesting times.
Stupid is what stupid does. The FED (private bank) privately owned by the following shareholder families- Siefs, Lazzard, Kuhn Loeb, Goldman Sacs, Morgans, Rockefellers, Queen Beatrix, and the ROTHSCHILD FAMILY.
CANNOT RAISE interest rates. If they do they will crash the world markets. So I guess Garth you are betting on collapse!??
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.”
Thomas Jefferson
Doug,
Your wasting your time trying to read into Yellin and the Fed decision… Even an increase would be so small that it wouldn’t make any difference. It’s more how to make an impression on the economists and investors along with the election.
The fed will wait till Nov. election… After that it’s QE4 and markets will continue to rise as money runs to the market in hopes of some form of return. It’s inflation in itself.
I’m glad though that you brought the idea in that there is a political motivation and strategy involved.
@#86 non+
China.
The new rich “brat” on the block.
https://www.google.ca/url?url=https://www.theguardian.com/world/2016/sep/04/barack-obama-deliberately-snubbed-by-chinese-in-chaotic-arrival-at-g20&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjika-f_vXOAhVP82MKHW1pCNMQFggvMAY&usg=AFQjCNGOrvj17tMq5JYav4uRsMlqB5cEtQ
Crooked Donald caught again. Poor little Trumpkins. So much to explain away.
http://www.thedailybeast.com/cheats/2016/09/04/report-trump-took-saudi-cash.html?via=desktop&source=copyurl
#92 Shanghai Sharon on 09.03.16 at 10:27 pm
Too much distraction over popular media issues. The latest being T Ball Trudeau standing for a oddly angled selfie on the Great Wall of China railing against Trump building a wall when it worked pretty well for the Chinese at the time.
/////
oh the horror…
how about you brush up your hystori
wall newr worked well didn’t stop mongols, pollution and certainly is not stopping outflow of capital.
Only way to upstage Trump is if Yellen showed up naked…….HAHAHA! That was funny. Garth, the force is strong with this one
The electronic voting machines already have hilary in for an easy win. Eixt polls may upset the masses if they report or figure it out.
The whole system is rigged by central bankers creating currency out of nothing and taxing the population to ovlivion. Currency needs to be backed by tangible assets which it is not, so until it is… Those who make the numbers call the shots
It’s so easy to see, yet so many smart people refuse to acknowledge the truth about the rotten to the core Federal Reserve
Hypnotized from the day you were born
“While many see this as a sign of an overheated market and a signal to take profits, the historical facts suggest otherwise”
I never understood this “take profits” notion unless one needs the cash or cap gain/loss for tax purposes. The markets have been good to my portfolio and maybe this month, (or whenever, it’s inevitable), we’ll see a pullback but what’s a girl supposed to do about it? What, take profits and leave ’em on the sidelines in a MMF? And then what, try to time the market for re-entry? Or take profits from the winners and re-allocate to the losers? That’s what I call re-balancing. What’s the point of taking profits? Doug?
#119 crowdedelevatorfartz
Some would take great offense at your blasphemous treatment of Dylan and Cohen. Others would agree wholeheartedly.
I do neither. I’m too old to get huffy about stuff like that. Yeah, neither one of them could sing. But they were pretty good poets and music is how they chose to delivered their output. Others covered their lyrics far better. Cases in point:
k.d. lang’s version of “Hallelujah”
Jimi Hendrix’s version of “All Along the Watchtower”
Then there’s Laura Nyro. She had a voice like a screech owl but was a superb songwriter. Her record company didn’t know what to do with her. They let her make some albums but didn’t try very hard to promote them. Many other artists had huge hits with her songs.
I like to listen to her but it’s an acquired taste. Maybe like anchovies on pizza.
————————————
To get back on subject for a second. Doug presents an excellent rationale for believing rates will rise this month. Certainly Yellen should raise rates now. But I’m kind of doubting it will happen.
98- Canada is already in a major recession but out media love affair with T Ball Trudeau will not report on it. The reason for this is because the Liberals reward loyal journalists with turns as Governor General. We are waiting to see which one is crowned.
I hope I don’t get in trouble for posting this, but here’s an excellent free documentary that came out the other day from Casey Research concerning China that everyone should watch:
http://www.caseyresearch.com/china
No gold-bug-ish stuff. No attempts to sell you investments or newsletters. Nor conspiracy theory crap. Just the rather startling facts on how China is following a deliberate strategy of unseating the United States as the global economic superpower.
You lost me at hello. The feds are not raising rates. You guy are so duped over this
MSM caught cutting feed for any POSITIVE video of Donald Trump. Cameraman even protests. You know the cockroach theory right Doug?
http://allnewspipeline.com/MSM_Busted_On_Hot_Mic_Blackout.php
#131 rosie on 09.04.16 at 11:28 am
Crooked Donald caught again. Poor little Trumpkins. So much to explain away.
http://www.thedailybeast.com/cheats/2016/09/04/report-trump-took-saudi-cash.html?via=desktop&source=copyurl
++++++++++++++++++++++++++++++++++++
Really? Do you people do ANY research on the Clintons? Or are you so one sided you are not “physically able” to do so?
Go watch Clinton Cash, The Clinton Crime Family and all the Dinesh D’Souza clips you can find all mentioned on You Tube….then come back and tell us how BAD Donald Trump is……I dare you.
#110 Debbie:- Doug is the sexy investment dude and must be directed to an appropriate venue for his dinner. The Duke Of York is where all the hot young women hang out with the big money and a must go and see. He can hoop a new client and walk out with some dessert at the same time.
First off, Trump is basically neck and neck with Hillary in the poles. If there was any doubt that the media was nothing more than a propaganda tool before this election, it has now been erased. That’s the legacy of this election cycle. One of them at least. It’s amazing to watch how blatantly biased the media is. They are literally not even trying to hide it anymore. Maybe this was Trump’s idea all along or maybe it wasn’t. Who knows?
Here in Canada we got a taste of this during the last election. It was pretty obvious to anyone who was paying attention. When the drama teacher vowed to increase spending to outlets like the CBC, he all of a sudden could do no wrong, even though his policies were incoherent and absolute garbage.
Back to the US,
What Trump says makes sense. There is a problem with illegals in the southern border states. There is a problem with trillions of dollars of debt. He’s not making it up. All anyone has to do is look across the ocean to Europe and see how much of a complete failure the EU is on all accounts to see where this progressive/globalist policy leads: debt, terrorism, low wages, creeping socialism and failure.
Moreover, why does any criticism of Trump always degenerate into a insult? He’s RACIST! HITLER! etc. this is symptomatic of the degree of radicalism that progressive policies have had on the population. There are literally millions of Americans who are embarrassed to be Americans these days. Ashamed for what their ancestors have fought for. The media is partially responsible for this, but so are other institutions like universities/colleges. It’s really getting bad.
If you do not recognize Trump’s allure (or what the message he stands for) you are not looking hard enough. It’s not racism, it’s economics.
With regards to the FED. Isn’t it a little suspicious they are so preoccupied the election? Does the economy come to a standstill for an entire year during an election cycle? No of course not. Why then, does it matter who is in power since the FED should be for Americans and not any one political power? Garth even mentioned it, markets like democrats in power. Why? How dependent on never ending stimulus is this stock market and the supposed “recovery”? Why didn’t they raise at the last meeting? There was nothing going on in the world and positive data all around. Is the recovery so delicate it cannot handle another .25% raise every 8 months? It’s all too suspicious.
IMO we can reasonably predict a few things:
-Whatever happens in the election, Trumpism will not go away. People are tired of this SJW crap. The pendulum is swinging.
-The media is seen more and more as a joke being run by rich limousine liberals peddling their ideology.
-The FED will have to act sooner or later, and when they do the US market will be cut in half back to reality.
-If there is another severe recession soon, we are screwed since these guys have used all their ammo and are out of bullets.
-Hillary being elected means 4 years of more unending stimulus and nothing but a continued can kicking until the collapse (stock market down 50%).
MF
Anyone in the Private sector with a track record of the Feds, would have long been fired.
Get rid of the bozos and put together a committe of barbers, taxi drivers and shoe shine boys.
Can’t be any worse then Yellen and her cohorts.
#123 TurnerNation:- When ground zero hits the drunks in the condos will be playing the Wipe Out song by the Ventures before they take the final jump. Its going to be nasty walking around those streets at night.
Smoking Man on 09.03.16 at 9:37 pm
Murdering your own liver is So under rated.
====================
A wise guy once said, “The liver is evil. It must be punished!”
Cheers, R
#22 Setting the Record Straight on 09.03.16 at 3:50 pm
“http://www.zerohedge.com/news/2016-09-03/sorry-losers-how-fed-has-screwed-many-protect-few”
This is a bit counterfactual. We don’t know how those lists would be different if rates didn’t drop significantly after the GFC.
I’m sure some of those “winners” would be eff’d too as their equity would be destroyed through bankruptcy. And many of those “losers” would be terribly affected if those bankruptcies put the pensions underwater, made renters evicted because they can’t pay rent, etc.
Overall, it’s a very simplistic, and angry (thus emotional) take on something that people generally don’t know how works.
Believe at your own peril…
#44 ZeroHedge the new WSJ on 09.03.16 at 5:31 pm
“OK Doug.
http://www.realclearpolitics.com/epolls/latest_polls/
Saturday, September 3
Race/Topic (Click to Sort) Poll Results Spread
General Election: Trump vs. Clinton LA Times/USC Clinton 42, Trump 45 Trump +3″
————————————————
http://www.realclearpolitics.com/epolls/latest_polls/
LOL
September 4, 2016
CBS/YouGov (Penn): Clinton 45, Trump 37 = +8 Clinton
CBS/YouGov (NC): Clinton 46, Trump 42 = +4 Clinton
New day, new data. What you post has been an anomaly for a while… Far more Blue leading indicators than Red for a long time…
#54 Baron David Rothschild on 09.03.16 at 6:45 pm
“Better read Doug but two problems, Trump is doing much better than polls are reporting but may not be able to win regardless due to rigged electoral college system.
As far as Sept rate hike, Schiff says no as Yellen does not want any damping of markets going into the election. So Dec, if there is one, would be more likely he says, https://www.youtube.com/watch?v=rLaq6_xXAco”
LOL Why in the world would anyone listen to Schiff??
Have you not seen his calls before? He thinks gold should be $10,000 per ounce. Biggest negative nancy in the land. Except for Marc Faber. He’s truly beyond any morsel of objectivity.
#90 rosie on 09.03.16 at 10:11 pm
“So many delusional Trumpkins looking for the truth at Zero Hedge. It’s a Russian propaganda outlet, nothing more-nothing less. Read something else Trumpkins. The truth might set you free.
http://bulgariaanalytica.org/en/2016/06/26/zero-hedge-вече-и-за-българска-употреба/”
Very interesting read. To the plebs, like Smoking Man and Mark M., it’s important to read other things to balance one sided views, such as Zero Hedge. If it’s true that it’s Russian propaganda, which I wouldn’t be too surprised because it’s cheap and effective, then people should take it with a big chunk of salt.
Thanks for sharing.
#125 Braj
“Are you talking about the markets or what? What about that whole Zen investor thing you had going on, about staying invested over the long term?”
——————————————————————–
I am talking about life.
Change is constant.
Do not simply look at what is happening now or what has already happened.
Of course the “markets” will change.
There will be great falls and there will be massive surges. Most of the time it will be flat. That goes for all “markets” (stocks, bonds, commodities, houses, carpets, cars, etc.).
As far as investing goes, you still need to invest for the long term with change in mind. Money is made both when markets are on the way up and when markets are on the way down.
My point previously was to emphasize that it is futile to wait and hope for things to go back to “the way they used to be”. We have to anticipate change, and adapt to it constantly. Like the way water changes its shape depending on if its in a river, a lake, a cup, your hands, a bowl, a sink, a tub, or a vase. It does not resist. It just flows and settles. It becomes what it’s in.
Be water, my friend.
Let’s predict the unpredictable
Johnston’s new biography of Donald Trump has just been published; it’s called “The Making of Donald Trump.”
http://www.truth-out.org/news/item/37497-the-making-of-donald-trump-david-cay-johnston-on-trump-s-ties-to-the-mob-and-drug-traffickers