How could I let this go? (A few word changes and bang.....it works)
"...And now the end is near - and so WE face the final curtain, My friend I'll say it clear, I'll state the case of which I'm UNCERTAIN...... Yes, there were times, I'm sure you knew, When The FED bit off more than they could chew, But through it all, when there was doubt - They ate it up and spit it out....they faced it all and they stood tall....and they did it their way........"
The WSJ announces this morning -
"The FED Closes the Chapter on Easy Money"
they called it quits on QE4….at 2 pm yesterday – they officially ceased pumping dollars into a stimulus program….many in the media made it sound as if this was an unexpected event – in fact – as we know – not only was is NOT unexpected – but they have carefully orchestrated this exit plan – laying out the schedule beginning with the first reduction in May and the final reduction in October. So – what’s the surprise? No one should have been caught off guard – the only wild card left is the timing of rate increases….and here - the FED left that door wide open.....leaving this case uncertain...... They played both sides of fence although they did appear to be a bit more hawkish vs. dovish….
The Fed has been giving themselves a lot of rope as they targeted the labor market as a means to justify its QE programs and now they are running out of that rope – noting that unemployment rate is coming down, and the labor ‘slack’ is receding. This point was made clear on Wednesday when they said:
“There has been a substantial improvement in the outlook for the labor market since the inception of [the] current asset-purchase program. Moreover, the [Fed] continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing.”
Do you just want to scream "I can't take it anymore"? Underutilization is diminishing? Unemployment at historic lows? What about the 100 million people without jobs? Yes- The economy has changed, it needs fewer workers and the labor market will never again be what it was, technology is disrupting the status quo and more jobs are moving overseas - so we should all get used to massive social programs - we just need to find a way to tax all of those foreign workers who have all the jobs....
I mean how annoyed are you when you call say BankAmerica customer service and get someone in Bangladesh that says - "Hello my name is Suzi - What's your name? Where are you from? What is your social security number"? Suzi? Oh and yes - please give me your account number as well and your mother's maiden name, your birth date and the name of your firstborn.....and then we ask ourselves - how do we protect our identities from being hacked? Really? We give these foreigners ALL the information they need....but that's another story....
OK – Not so quick there – let's not let them break their arm patting themselves on the back just yet…..the job is NOT done and in fact the program is ending with less than stellar reviews....as it did not lead to a surge in real job creation/hiring, economic output or wage growth and it did not cause inflation to skyrocket - in fact just the opposite and we are now seeing the Fed accentuate the ‘lack of inflation’ as a real problem……saying that
“Inflation has continued to run below the Committee’s longer-run objective.”
It is exactly this ‘below target’ inflation terminology that will now be held out as the reason that the Fed can play its cards close to the vest in terms of the timing of interest rate increases. Their statement to
“maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time…especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal.:”
Just about sums it up. I guess the six years of low rates is just not enough considerable time for this Fed. But in typical fashion - the statement is ambiguous....indicating that if the economy improves faster than expected, then a rate hike could come sooner than you might think conversely if not then not.
The Fed is clearly concerned about the implications of raising interest rates – (Refer to the Sweden story from yesterday’s note). We have already seen the dollar rally and treasury yields rally significantly on the mere ‘suggestion’ of interest rates rising….imagine what happens once we get clarity and then what the impact on the economy will be. It is clear that no country wants a strong currency just yet and this is just as true for the US. This reality should provide further support for the mkt.
Ok so while the Asian and European mkts rallied on Wednesday – the US indexes had a bit of volatile day – with the S&P moving in a range of 20 pts from low to high and back again. In the end – the major US indexes did close fairly flat – although all above their 50 dma’s after the Fed concluded its two day policy meeting, and confirmed that it was ending its monthly bond purchase program.
The US dollar and five year treasury yields, also rallied….now isn’t this just a kick in the pants……because the FED didn’t really give any clues as to the timing of when interest rates will start to rise and yesterday’s move in both those mkts suggests that rate hikes are closer than the mkt currently thinks. This may explain why the mkt sold off 100 pts in late afternoon trading – but then traders may have realized this was a bit of an overreaction and began bidding stocks higher again as they are not convinced yet that rates are going anywhere any time soon.
Look - reality is that the low interest rate environment is here for some time yet – no matter what they said and THIS will prove a key support for equities as the curtain falls on 2014.
Speaking of falling - US Futures are down 13 pts in early trading (7:30 am)....as strategists/analysts had some time to pull the FED statement apart to try and discern what it all means.....the mkt is now saying - ok today we get the GDP report - exp of 3%....the mkt knows that - BUT if the GDP report is stronger than that - it will immediately bring up the timing issue yet again.....and if the assumption is that rates will rise sooner than the fall of 2015 - then the mkt will re-price.....(trade lower) - the algo's will kick in and - well you know the story.
If we go into another 'corrective type' move - how long will it take before Janet sends the troops out to speak on every business channel out there? Without trying to influence any votes for next week - the last thing the administration needs is for there to be another 'meltdown' days before voters take to the polls......so is Janet due to have lunch with Obama anytime soon?
A test of the 50 dma on the S&P (1967) feels like it's in order - it's only a 15 pt move lower and with futures pointing down 13 right now - it ain't out of the question at all. Keep your eyes on what happens to the futures in the seconds BEFORE the announcement - the fast money guys who 'pay for access' will show the rest of us the way....A miss for GDP will surely send the rate talk to the back of the bus and a swift reversal would be the result. Oh what a tangled web we weave.....
This morning in Europe - mkts are taking a beating as they digest the FED statement..... even though eco data from the EU was good. Spanish GDP was in line with estimates, German unemployment saw the first drop since July, and EU Economic Sentiment beat expectations at 100.7 vs. (E) 99.5. FTSE -1%, CAC 40 - 1.17% DAX -1.71% EUROSTOXX -1.60%, SPAIN -2.26% and Italy -2%.
Take Good Care
KP
Chicken Saltimbocca
.A classic yet simple dish to make - For this you need:
4 (6 Ounce) Boneless Thins Sliced Chicken Breasts, Flour Seasoned w/ S&P, Minced Fresh Sage, Thin Slices of Prosciutto, Olive Oil, Dry White Wine, Lemon Juice, S&P and Butter
Chicken should be about 1/4 inch thick. Rinse and drain. Set aside.
Place the seasoned flour in a shallow bowl, and dredge each piece of chicken on both sides, then place on a baking sheet. Sprinkle the top of each cutlet with the chopped sage, then cover with a slice of prosciutto.
Press the prosciutto to help it to adhere to the chicken and then refrigerate for 1 hr. Remove and let rest for 20 mins or so before you cook.
Heat the oil and butter in a heavy skillet over medium high heat until lightly smoking, then place 4 cutlets in the pan prosciutto side down. Cook the cutlet until you can see the edges are beginning to brown, about 3 minutes. Carefully flip the cutlets over, and reduce heat to medium and cook until no longer pink inside, about 2 to 3 minutes. Place the cutlets on a warm platter, cover with foil, and cook the remaining cutlets.
Once all the cutlets are cooked and moved to the platter, add the wine and lemon juice to the pan and scrapping up and browned bits, cook over high heat until the liquid has been reduced to about 1/2 cup. Add a bit more butter and season with s&p and stir until blended. Pour the sauce over the chicken and garnish with fresh sage leaves.
You can serve this dish with roasted potatoes and a large salad.
Buon Appetito.
"...And now the end is near - and so WE face the final curtain, My friend I'll say it clear, I'll state the case of which I'm UNCERTAIN...... Yes, there were times, I'm sure you knew, When The FED bit off more than they could chew, But through it all, when there was doubt - They ate it up and spit it out....they faced it all and they stood tall....and they did it their way........"
The WSJ announces this morning -
"The FED Closes the Chapter on Easy Money"
they called it quits on QE4….at 2 pm yesterday – they officially ceased pumping dollars into a stimulus program….many in the media made it sound as if this was an unexpected event – in fact – as we know – not only was is NOT unexpected – but they have carefully orchestrated this exit plan – laying out the schedule beginning with the first reduction in May and the final reduction in October. So – what’s the surprise? No one should have been caught off guard – the only wild card left is the timing of rate increases….and here - the FED left that door wide open.....leaving this case uncertain...... They played both sides of fence although they did appear to be a bit more hawkish vs. dovish….
The Fed has been giving themselves a lot of rope as they targeted the labor market as a means to justify its QE programs and now they are running out of that rope – noting that unemployment rate is coming down, and the labor ‘slack’ is receding. This point was made clear on Wednesday when they said:
“There has been a substantial improvement in the outlook for the labor market since the inception of [the] current asset-purchase program. Moreover, the [Fed] continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing.”
Do you just want to scream "I can't take it anymore"? Underutilization is diminishing? Unemployment at historic lows? What about the 100 million people without jobs? Yes- The economy has changed, it needs fewer workers and the labor market will never again be what it was, technology is disrupting the status quo and more jobs are moving overseas - so we should all get used to massive social programs - we just need to find a way to tax all of those foreign workers who have all the jobs....
I mean how annoyed are you when you call say BankAmerica customer service and get someone in Bangladesh that says - "Hello my name is Suzi - What's your name? Where are you from? What is your social security number"? Suzi? Oh and yes - please give me your account number as well and your mother's maiden name, your birth date and the name of your firstborn.....and then we ask ourselves - how do we protect our identities from being hacked? Really? We give these foreigners ALL the information they need....but that's another story....
OK – Not so quick there – let's not let them break their arm patting themselves on the back just yet…..the job is NOT done and in fact the program is ending with less than stellar reviews....as it did not lead to a surge in real job creation/hiring, economic output or wage growth and it did not cause inflation to skyrocket - in fact just the opposite and we are now seeing the Fed accentuate the ‘lack of inflation’ as a real problem……saying that
“Inflation has continued to run below the Committee’s longer-run objective.”
It is exactly this ‘below target’ inflation terminology that will now be held out as the reason that the Fed can play its cards close to the vest in terms of the timing of interest rate increases. Their statement to
“maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time…especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal.:”
Just about sums it up. I guess the six years of low rates is just not enough considerable time for this Fed. But in typical fashion - the statement is ambiguous....indicating that if the economy improves faster than expected, then a rate hike could come sooner than you might think conversely if not then not.
The Fed is clearly concerned about the implications of raising interest rates – (Refer to the Sweden story from yesterday’s note). We have already seen the dollar rally and treasury yields rally significantly on the mere ‘suggestion’ of interest rates rising….imagine what happens once we get clarity and then what the impact on the economy will be. It is clear that no country wants a strong currency just yet and this is just as true for the US. This reality should provide further support for the mkt.
Ok so while the Asian and European mkts rallied on Wednesday – the US indexes had a bit of volatile day – with the S&P moving in a range of 20 pts from low to high and back again. In the end – the major US indexes did close fairly flat – although all above their 50 dma’s after the Fed concluded its two day policy meeting, and confirmed that it was ending its monthly bond purchase program.
The US dollar and five year treasury yields, also rallied….now isn’t this just a kick in the pants……because the FED didn’t really give any clues as to the timing of when interest rates will start to rise and yesterday’s move in both those mkts suggests that rate hikes are closer than the mkt currently thinks. This may explain why the mkt sold off 100 pts in late afternoon trading – but then traders may have realized this was a bit of an overreaction and began bidding stocks higher again as they are not convinced yet that rates are going anywhere any time soon.
Look - reality is that the low interest rate environment is here for some time yet – no matter what they said and THIS will prove a key support for equities as the curtain falls on 2014.
Speaking of falling - US Futures are down 13 pts in early trading (7:30 am)....as strategists/analysts had some time to pull the FED statement apart to try and discern what it all means.....the mkt is now saying - ok today we get the GDP report - exp of 3%....the mkt knows that - BUT if the GDP report is stronger than that - it will immediately bring up the timing issue yet again.....and if the assumption is that rates will rise sooner than the fall of 2015 - then the mkt will re-price.....(trade lower) - the algo's will kick in and - well you know the story.
If we go into another 'corrective type' move - how long will it take before Janet sends the troops out to speak on every business channel out there? Without trying to influence any votes for next week - the last thing the administration needs is for there to be another 'meltdown' days before voters take to the polls......so is Janet due to have lunch with Obama anytime soon?
A test of the 50 dma on the S&P (1967) feels like it's in order - it's only a 15 pt move lower and with futures pointing down 13 right now - it ain't out of the question at all. Keep your eyes on what happens to the futures in the seconds BEFORE the announcement - the fast money guys who 'pay for access' will show the rest of us the way....A miss for GDP will surely send the rate talk to the back of the bus and a swift reversal would be the result. Oh what a tangled web we weave.....
This morning in Europe - mkts are taking a beating as they digest the FED statement..... even though eco data from the EU was good. Spanish GDP was in line with estimates, German unemployment saw the first drop since July, and EU Economic Sentiment beat expectations at 100.7 vs. (E) 99.5. FTSE -1%, CAC 40 - 1.17% DAX -1.71% EUROSTOXX -1.60%, SPAIN -2.26% and Italy -2%.
Take Good Care
KP
Chicken Saltimbocca
.A classic yet simple dish to make - For this you need:
4 (6 Ounce) Boneless Thins Sliced Chicken Breasts, Flour Seasoned w/ S&P, Minced Fresh Sage, Thin Slices of Prosciutto, Olive Oil, Dry White Wine, Lemon Juice, S&P and Butter
Chicken should be about 1/4 inch thick. Rinse and drain. Set aside.
Place the seasoned flour in a shallow bowl, and dredge each piece of chicken on both sides, then place on a baking sheet. Sprinkle the top of each cutlet with the chopped sage, then cover with a slice of prosciutto.
Press the prosciutto to help it to adhere to the chicken and then refrigerate for 1 hr. Remove and let rest for 20 mins or so before you cook.
Heat the oil and butter in a heavy skillet over medium high heat until lightly smoking, then place 4 cutlets in the pan prosciutto side down. Cook the cutlet until you can see the edges are beginning to brown, about 3 minutes. Carefully flip the cutlets over, and reduce heat to medium and cook until no longer pink inside, about 2 to 3 minutes. Place the cutlets on a warm platter, cover with foil, and cook the remaining cutlets.
Once all the cutlets are cooked and moved to the platter, add the wine and lemon juice to the pan and scrapping up and browned bits, cook over high heat until the liquid has been reduced to about 1/2 cup. Add a bit more butter and season with s&p and stir until blended. Pour the sauce over the chicken and garnish with fresh sage leaves.
You can serve this dish with roasted potatoes and a large salad.
Buon Appetito.
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