BLUF: SPX @ 2995 and GOLD @1437…Place Your Bets!!!
Summer-Sideways followed by a OCT-Run
TRIGGERS:
1) Congress will vote on Proposed DEBT CEILING (DC) by TR of next week! If no DC solution before the August break then they come back in SEP and the Treasury is out of money! DEC 18….TBD
**What does this mean? UST Liquidity Trap, No Gov Money Flows, No Gov Spending = Economy STOPS
2) FED CUTS??? End of June…25 bps, 50 bps and longterm are these insurance cuts or the beginning of a rate cut cycle by the FED! Be careful what you wish for!!!
***DC Increased w/Fed Cuts = SPX @ 3500, once we get into 2020, global macro will more than likely bring this back to earth...TBD!!! Spidey Sense mode begins!
Interesting: Macro
1)The 10/2 curve has not inverted yet in this cycle
2) Credit spreads
3) Housing Construction has to pick up…the business cycle w/out housing is nonexistent
3) All the Freight-Indexes are in the negative!
“The interest rate market has only a modest possibility of 50 bps implied in the pricing for the July meeting (24.5% according to Bloomberg WIRP as of mid-afternoon on 7/16), so the rates market isn’t really “demanding” a 50 bps cut. The real probability of 50 bps is actually less because the choices are not simply 25 or 50. The Fed may actually cut the IOER and RRP rates by 30 bps to again re-center the effective Fed Funds rate within their target range. And that’ll be a real 30 bps cut, not 25. This is my base case, because it seems like a nice way give some satisfaction to the various dovish perspectives on the committee.” —Andrew Norelli
“Conclusion: The ZLB has been a topic of study for nearly two decades. But recent history and the outlook for the longer-term future, make it more relevant than ever. Low inflation expectations, very low r-star, and slower growth all point to a challenging world where policymakers need to make the best use of the tools at their disposal to achieve their goals of strong economies and price stability. The key lessons from this research hold today and in the future. First, take swift action when faced with adverse economic conditions. Second, keep interest rates lower for longer. And third, adapt monetary policy strategies to succeed in the context of low r-star and the ZLB. These actions, taken together, should vaccinate the economy and protect it from the more insidious disease of too low inflation. Thank you.”
-July 18, 2019 John C. Williams, President and Chief Executive Officer NY FED
Place Your Bets!!! Somebody Please take the "Freakin" R-Star/ZLB out of the Feds language!!!
Cheers, enjoy your summer, I am!!!
Summer-Sideways followed by a OCT-Run
TRIGGERS:
1) Congress will vote on Proposed DEBT CEILING (DC) by TR of next week! If no DC solution before the August break then they come back in SEP and the Treasury is out of money! DEC 18….TBD
**What does this mean? UST Liquidity Trap, No Gov Money Flows, No Gov Spending = Economy STOPS
2) FED CUTS??? End of June…25 bps, 50 bps and longterm are these insurance cuts or the beginning of a rate cut cycle by the FED! Be careful what you wish for!!!
***DC Increased w/Fed Cuts = SPX @ 3500, once we get into 2020, global macro will more than likely bring this back to earth...TBD!!! Spidey Sense mode begins!
Interesting: Macro
1)The 10/2 curve has not inverted yet in this cycle
2) Credit spreads
3) Housing Construction has to pick up…the business cycle w/out housing is nonexistent
3) All the Freight-Indexes are in the negative!
“The interest rate market has only a modest possibility of 50 bps implied in the pricing for the July meeting (24.5% according to Bloomberg WIRP as of mid-afternoon on 7/16), so the rates market isn’t really “demanding” a 50 bps cut. The real probability of 50 bps is actually less because the choices are not simply 25 or 50. The Fed may actually cut the IOER and RRP rates by 30 bps to again re-center the effective Fed Funds rate within their target range. And that’ll be a real 30 bps cut, not 25. This is my base case, because it seems like a nice way give some satisfaction to the various dovish perspectives on the committee.” —Andrew Norelli
“Conclusion: The ZLB has been a topic of study for nearly two decades. But recent history and the outlook for the longer-term future, make it more relevant than ever. Low inflation expectations, very low r-star, and slower growth all point to a challenging world where policymakers need to make the best use of the tools at their disposal to achieve their goals of strong economies and price stability. The key lessons from this research hold today and in the future. First, take swift action when faced with adverse economic conditions. Second, keep interest rates lower for longer. And third, adapt monetary policy strategies to succeed in the context of low r-star and the ZLB. These actions, taken together, should vaccinate the economy and protect it from the more insidious disease of too low inflation. Thank you.”
-July 18, 2019 John C. Williams, President and Chief Executive Officer NY FED
Place Your Bets!!! Somebody Please take the "Freakin" R-Star/ZLB out of the Feds language!!!
Cheers, enjoy your summer, I am!!!