Wednesday, March 16, 2016


Title for xkcd fans.

Today is Fed day. I'm not predicting a rate rise today, but I would be not at all surprised if it happens. This is at odds with the rest of the market, so it's one heck of a bitch to determine whether to sell this morning or to hold for the pop that would come if a rate rise doesn't happen. Oh well: I'm no longer leveraged-long, so I guess I have space to react to whatever happens.

And here's some news to muddy the waters:

Calculated Risk - retail sales decline 0.1% in February. Retail and food service ex-gas increased yoy by 4.8%, but New Deal Demoncrat says McBride is unjustified in looking at this metric because the mom changes introduce noise into the yoy series that can mislead you. So ymmv, iykwimaityd, ianalndipootv, ykinok.

New Deal Demoncrat - the USD has ceased being a drag on the US economy. TWUSDX looks topped, and that means the deflationary current of a rising USD is going away, which means Yellen has more reason to raise rates now than she did in December.

Tim Duy the science guy - the battle for Yellen's soul. I think people are grossly overestimating Brainerd's dovishness: she's going to have a much harder time identifying deflationary pressures this week than she did a few months ago. Oil, base metals and USD are no longer headwinds, they're going to become inflationary pressures that are ideal for a Fed tightening cycle to push against; and nobody's going to stay dovish just to help out a deflationary disaster like Germany because that would mean taking a domestic inflation bullet for a country that has a deflation fetish.


  1. For the XKCD impaired ...

  2. Though XKCD-wise, I prefer, "So, it has come to this."
    Or you could combine the two for the Kosh-esque, "And so it begins ..."