Month: September 2014

Perhaps the one most important, if completely meaningless chart (because it will as usual revised countless times in the next year and the final outcome will be anything but what the Fed is predicting) that everyone was looking for in today’s FOMC forecast materials, is the so-called “dots” – the Fed’s estimates of where the Fed Fund’s rate will be at the end of 2016.

The big picture: while there is increasing clustering in the 2-2.5% region, the lower and higher forecasts actually went down, while the upper range of the Fed Funds rate forecast chart for 2016 was reduced from 6% to 5%.

In other words, when forecasting inflation, growth and the Fed Funds rate, the Fed will need a smaller chart.

And yet, while everything will surely change, one thing is certain: the one “dot” sliding ever lower has a name: Kocherladota.

Of note: while the chaos in the 2016 dots was clear, the 2015 “dots” actually rose from a median estimate of 1.125% in June to 1.375% in September.

And while the dots chart was a snoozer this time around, it was the “Number of participants that saw a rate hike in 2015” that got the most attention today, rising from 12 in June to 14 as of the most recent meeting, with only 2 now expecting a rate hike in 2016.

June:

 

and September:

via Zero Hedge http://ift.tt/1uHJiUX Tyler Durden

Perhaps the one most important, if completely meaningless chart (because it will as usual revised countless times in the next year and the final outcome will be anything but what the Fed is predicting) that everyone was looking for in today’s FOMC forecast materials, is the so-called “dots” – the Fed’s estimates of where the Fed Fund’s rate will be at the end of 2016.

The big picture: while there is increasing clustering in the 2-2.5% region, the lower and higher forecasts actually went down, while the upper range of the Fed Funds rate forecast chart for 2016 was reduced from 6% to 5%.

In other words, when forecasting inflation, growth and the Fed Funds rate, the Fed will need a smaller chart.

And yet, while everything will surely change, one thing is certain: the one “dot” sliding ever lower has a name: Kocherladota.

Of note: while the chaos in the 2016 dots was clear, the 2015 “dots” actually rose from a median estimate of 1.125% in June to 1.375% in September.

And while the dots chart was a snoozer this time around, it was the “Number of participants that saw a rate hike in 2015” that got the most attention today, rising from 12 in June to 14 as of the most recent meeting, with only 2 now expecting a rate hike in 2016.

June:

 

and September:

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An interesting week for the evolution of Forex!  

Coming just after leading US based intellectuals calling for the dethroning of “King Dollar” in an NY Times op-ed, we are moments away from a vote that could cause a major shakeup of the Eurozone, potential crash of the GBP, and creation of a new Scottish currency yet to be named.  This will be very interesting considering Scotland’s currency history, during the 18th and 19th centuries many Scottish banks issued their own currencies.  And some have suggested they might try Bitcoin.

Meanwhile, the Ruble is at historic lows against the US Dollar, on the same day that China announced a “Stealth QE” program.  Moscow is ‘warning against panic’ as the ruble plunges – obviously these officials don’t understand the West’s version of Forex policy (to destroy your currency as much as possible via ZIRP & QE).

Sanctions are meant to ‘punish Russia’ but isn’t the purpose of QE, Abenomics, and similar strategies to lower the value of the currency as much as possible to boost exports?  Since the breakup of the Soviet Union, the Russian economy has grown rapidly and strongly.  They have one of the fastest growing middle classes in the world, less poverty than the United States, and new generations of industrial technology such as Nuclear plants that do not produce traditional waste.  When Russia implemented the market based system they have now, they had to reinvent themselves.  Development was a necessity – not a luxury of trust fund babies making businesses out of hobbies in their parents garage.  

Scotland will have to do the same; and the foundation of their new system must be a robust currency system and monetary policy.  Given modern technology this is a lot easier to do than 100 years ago.  Also there are now hundreds of examples of alternative currencies.  NZD/USD now trading at about .81 – the GDP of New Zealand currently 182 Billion.  The GDP of Scotland is about 216 Billion.  

Of course, part of how the Euro was sold was on the basis of a consolidated currency, that it would be good for trade, save money on exchange, a consolidated bond market, etc.  But the crisis in the Eurozone is showing the cracks in that model.  This t-shirt eloquently explains why a consolidated currency will never work in a diverse region of different languages, cultures, and markets:

Trade the vote

A simple strategy to trade the vote, of course if your broker will clear the trades (already we are receiving volatility notices); buy a long straddle (put and call) on EUR/GBP, GBP/USD, and GBP/JPY.  If you live in the Dollarzone and can’t access Forex options, this can be done with spot Forex by placing 2 limit orders 50 pips above and below the price going into the vote with a trailing stop (likely only one will get triggered).  If GBP spikes 100 – 200 pips, the limit order will get triggered and then you will have to close it manually or let the trailing stop take it out.  Of course in this scenario it’s questionable if your broker would honor the limit (especially if there is a server malfunction or bottleneck of orders as happened when the SNB intervened and subsequently crashed a bunch of FX servers).  Another situation that can happen though is as initial results come in the market can swing violently in one direction and then the other as we have seen during many Fed announcements.  Guid Luck!

Scottish coins, including a unicorn from the reign of James III. Photograph: Kim Traynor/Wikipedia

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Perhaps not surprisingly – following Hilsenrath’s ‘leak’ – the FOMC has decided to keep the “considerable time” language alive-and-well in its latest statement, supporting the uber-dovishness rate guidance as QE is tapered as expected:

• *FED TO END QE PROGRAM AT NEXT MEETING IF OUTLOOK HOLDS
• *FED RELEASES EXIT STRATEGY GUIDELINES
• *FED SAYS INFLATION `RUNNING BELOW’ FOMC’S LONG-RUN GOAL

Record high stocks, record low corp yields, surging GDP, PMIs soaring, housing and consumer sentiment exuberant, jobless claims at lows, JOLTS at highs, and the Apple iPhone 6 – if that doesn’t draw Yellen to the middle, we don’t know what will… but we are sure she’ll explain in the press conference. Full redline below…

Pre-FOMC: S&P Futs 1992.00, 10Y 2.56%, Gold $1235, WTI $94.20, USDJPY 107.50

via Zero Hedge http://ift.tt/XDXodU Tyler Durden

Perhaps not surprisingly – following Hilsenrath’s ‘leak’ – the FOMC has decided to keep the “considerable time” language alive-and-well in its latest statement, supporting the uber-dovishness rate guidance as QE is tapered as expected:

• *FED TO END QE PROGRAM AT NEXT MEETING IF OUTLOOK HOLDS
• *FED RELEASES EXIT STRATEGY GUIDELINES
• *FED SAYS INFLATION `RUNNING BELOW’ FOMC’S LONG-RUN GOAL

Record high stocks, record low corp yields, surging GDP, PMIs soaring, housing and consumer sentiment exuberant, jobless claims at lows, JOLTS at highs, and the Apple iPhone 6 – if that doesn’t draw Yellen to the middle, we don’t know what will… but we are sure she’ll explain in the press conference. Full redline below…

Pre-FOMC: S&P Futs 1992.00, 10Y 2.56%, Gold $1235, WTI $94.20, USDJPY 107.50

via Zero Hedge http://ift.tt/XDXodU Tyler Durden

David Cameron and the British media have been freaking out about the potential Scottish independence.

They've blathered on about "history", "common defense" and other red herrings.

But it's really all about oil …

Specifically, if Scotland becomes independent, it gets to keep 90% of the revenues from its huge oil reserves.

The New York Times reports:

Scottish nationalists have long argued that being governed from London has deprived their country of its fair share of the wealth from Britain’s oil and natural gas fields, which mostly lie in North Sea waters off their shores.

 

“It’s Scotland’s oil” was the rallying cry in the 1970s that helped raise the profile of the Scottish Nationalist Party, which now leads the country and is pushing for a vote to secede in the referendum on Thursday. Alex Salmond, the politician leading the separatist movement, has pointed to North Sea energy as the treasure that would help finance an independent Scotland — ensuring that the country could continue the generous public spending, including free university tuition, that he is promising voters.

Al Jazeera notes:

Massive oil reserves in the North Sea are at the heart of the Scottish independence debate. Many are questioning whether the reserves are just for Scotland or if the rest of the United Kingodm should continue to benefit from their profits.

NBC writes:

The ‘Yes’ campaign … says Scots should have total control of their own affairs and that revenue from Scotland’s offshore oil fields would sustain the country’s economy.

 

In addition, as Max Keiser explained:

(1) The UK can now borrow cheaply using the giant Scottish oil reserves as collateral

 

(2) If Scotland leaves, the collateral (oil reserves) is no longer available

 

(3) So the cost of borrowing money for Britain skyrockets

Scotland’s North Sea oil reserves are slowing running out, and so oil won’t be such a valuable resource forever.  But for now, it is still invaluable (especially as collateral for British loans) … and the key to Britain’s panic over potential Scottish independence.

via Zero Hedge http://ift.tt/XDXm5U George Washington

What happens when a camera on a stick captures an Argentinian gun-yielding thug on a bike? This.

As Digg reports, traveler Alexander Hennessy was riding a bike through a rough neighborhood in Buenos Aires when he was held up at gunpoint. Watch as Hennessy gets away unharmed, and with an amazing video.

h/t Mike Graziano

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