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Logan Mohtashami says

All Together Say Good-Bye to ZIRP

Ironman says

To be replaced by NIRP.

Whew. What a relief.

Above 50% was rare in this cycle, in fact it never happened

However, tracking the dollar, 6 month, 1's 2's and 5's they were telling you the rate hike was coming.

However for me it was always 2's over 0.80%, that has to hold into December

The derivatives would destroy everything if they raised rates. They are not going to touch rates. Even without derivatives, the interest payments on the national debt would get so ridiculous if they raised rates that it would cause hyperinflation, which is what happens when interest payments exceed 8 pct of gdp.

Here is the key metric to show rate hike is coming, it's the 2 year note

Not to mention the dollar has already had it's strong run, like it usually does in history, the dollar makes it's biggest move before the first rate hike

narrator says

They are not going to touch rates. Even without derivatives, the interest payments on the national debt would get so ridiculous if they raised rates that it would cause hyperinflation, which is what happens when interest payments exceed 8 pct of gdp.

The Federal Reserve doesn't set interest rates on US debt.

Fucked By Goats Ironman says

All the shiteaters that said "the Fed will never, can never, ever raise rates, ever again for the rest of time".......I wonder what further stupidity they'll trot out after the rate hike comes, all 25 basis points. Some apocalyptic nonsense I imagine.

You turn everything into an argument against those you don't like, be it Christians or fiscal conservatives. In reality the point of the Fed never raising rates has been long won by those who bet on it. Of course there comes a point in time where rates will have to be raised, no matter what. However the rate hike was anticipated and celebrated by those trying to prove the anti-Fed crowd wrong time and time again, month after month. The last date was September, for SURE. Nothing happened and it's 2 months later now. Also .25 points is pretty much the same as keeping it at ZIRP and we won't know how the market reacts until they do it. Likely no major reaction as it is effectively still ZIRP.

When the rate hike cycle starts, keep an eye out on Core Headline inflation, ex energy it was at a cycle high of 2.8%, The Fed has it's own ECI wage index tracker, pretty much where it was back in 2004 when the rate hike cycle started but that was working from a 1% Fed Funds rate

You rang?

Fucked By Goats Ironman says

All the shiteaters

Fucked By Goats Ironman says

Is it anything like the goat entrails the anti-Fed crowd used to assure the world that QE could *never* end and that hyper-inflation was inevitable? How about when the anti-Fed crowd threw out the sacred bones and pronounced the death of the dollar through debasement and sacrilegious manipulation? Those were good bets, huh?

You forgot about the gold to infinity bet. That was a winner.

my bet is no change for december. the economy has been stuck in traffic all year - 1st gear, 2nd gear, back to first gear. you need to get up to cruising speed before you can make an informed decision about the direction the economy will be heading.

The question is what is next

#1 The U.S. would never stop Q.E. because the stock market would collapse and the U.S. would dive right back into the next Great Depression

#2 The U.S would never, I mean never raise rates ever

So, this has some time left, but this will end shortly

Again, 6 month, 1 year, 2 year and the Dollar had been forecasting this for a while and X energy CPI inflation is running at 2.8%

So, the question is do we get the hat trick, what is the next thing that America can't ever do because we will have another depression

If you want to follow recessionary trend economics

#1 Rate Hike cycle typically is well under way

#2 Unemployment claims rises above 300K on the 4 week moving average without a one time economic event when we are starting from these levels

#3 LEI needs to fall at least for 4-6 months

This formula has worked well in the past and I am not sure about the economic theory of the The Next Great Depression bears for the past 7 years, the thesis would be something that we haven't seen in recent modern economic history

http://www.businessinsider.com/goldman-the-fed-is-going-to-hike-4-times-in-2016-2015-11

GOLDMAN: The Fed will hike 4 times in 2016

Last few days to say Good-bye

6 month and 2 year are keys to the Fed Rate hike, still looking good to end #ZIRP and the ADP number was good enough today

US 2y yield rises above 0.96%, Highest since May 2010.

I think inflation will really start to get going soon. Interest payments on the national debt are going to rise significantly and all that money coming out of interest payments is going to have to find something to do with itself. Especially with the fed continuing with QE. On the other hand, an emerging market debt crisis and devaluation might allow us to export our inflation, but that will take a while to develop.

narrator says

I think inflation will really start to get going soon

The down turn in energy has kind of run it's course, unless it gets lower, that downside to core inflation has been done.

X energy service inflation is running at 2.9%

Logan Mohtashami says

The down turn in energy has kind of run it's course, unless it gets lower, that downside to core inflation has been done.

Core already excludes energy.

tatupu70 says

Core already excludes energy.

X energy service inflation is actually running at 2.9% now

But the way YoY inflation metrics are calculated, unless oils goes down again, we won't see deflationary pressures anymore from oil.

Shorter trim CPI 6 months are already picking higher.

PCE inflation isn't the best metric to use, it's been below 2% 50% of the time for the past 20 years.

Really,

3 month
6 month
1 year
2 year
The Dollar in the last 18 months have done a lot of the Fed's Core work form them

Unless

CPI core
ECI wage Index
JOLTS/Avg YoY grow

I am not sure how many rates hike they will do unless they see more action here, but short term inflation good enough for them to hike

Sticky CPI

A lot of the CPI inflation has come from rent, but the last number

Core #CPI, ex-housing, 1.18% from 1.00%. Highest since mid-2014.

Primary Rents actually decelerated to 3.64% from 3.74%, and OER roughly unch at 3.08% from 3.09%

In short, their is now a real time uptrend in Inflation and staying at Zero doesn't seem practical anymore

The real debate comes between a group that believes #ZIRP is emergency interest rate policy vs a Group that believes their is demographic, technology, debt and globalization deflationary factors that have been working on a downward rate pressure for 34 years,

So, the real fun begins now because a 0.25% hike means nothing in big terms, it's now what do they do going forward.

A lot of economic credibility has gone out the door, with the QE recession, QE4, Fed will never raise rates ever again... but it comes from a group that have been bearish on humanity for a while now