The Big Fed Thread

[TheCountOfNowhere]

China trade may sway Fed's rate decision

LONDON The Federal Reserve's debate over whether to raise U.S. interest rates in June may be decided in the coming week, as investors look for any cracks in China and evidence of a solid start to the second quarter in the United States.

Serious...does the fed still have any Fred?

The banks myat still be on their knees. The new mega bubble is insane...all driven by low rates and cheap money.

War can now be the only end game.

[Eddie_George]

China trade may sway Fed's rate decision

LONDON The Federal Reserve's debate over whether to raise U.S. interest rates in June may be decided in the coming week, as investors look for any cracks in China and evidence of a solid start to the second quarter in the United States.

So the Fed's decision rests upon fabricated Chinese figures.

[interestrateripoff]

Fed's Kashkari says rise in inflation will trigger rate hike

MINNEAPOLIS The Federal Reserve should raise U.S. interest rates before inflation reaches the Fed's 2-percent goal, given the lags with which monetary policy affect the economy, a top U.S. central banker said on Monday.

[interestrateripoff]

Trump On Debt Renegotiation: "You Never Have To Default Because You Print The Money"

"If interest rates go up, we can buyback debt at a discount if we are liquid enough as a country. People say I want to default on debt - these people are crazy. First of all you never have to default because you print the money I hate to tell you, so there is never a default. It was reported in the NYT that I want to default on debt - you know I am the king of debt, I love debt, but debt is tricky and its dangerous. But let me just tell you: if interest rates go up and bonds go down, you can buy debt - that's what I'm talking about."

Genius!

[interestrateripoff]

St. Louis Fed Slams Draghi, Kuroda - "Negative Rates Are Taxes In Sheep's Clothing"

"At the end of the day, negative interest rates are taxes in sheep’s clothing. Few economists would ever claim that raising taxes on households will stimulate spending. So why would they think negative interest rates will?"

[interestrateripoff]

Fed President Says Fed's Job Is To "Serve Main Street"

[billybong]

St. Louis Fed Slams Draghi, Kuroda - "Negative Rates Are Taxes In Sheep's Clothing"

"At the end of the day, negative interest rates are taxes in sheep’s clothing. Few economists would ever claim that raising taxes on households will stimulate spending. So why would they think negative interest rates will?"

In the olden days they used to say that the countries with the best economic prospects were the low tax countries but we know better now - that was the old economics and it's progressed on so much. The benefits of the new economics are certain to achieve "lift off" and "escape velocity" soon. The past 9 years have been building up to it. Some would even say the past 20 years and more have been building up to it the new economics are so great. There's always massive debt and ZIRP/QE etc of course.

Edited May 10, 2016 by billybong

[interestrateripoff]

Miami Emerges From Gloom Into Residential and Commercial Sunlight

After decades in the shadow of glamorous Miami Beach, Miami is having a building boom that enhances its appeal to businesses and residents.

[interestrateripoff]

‘Contract for Deed’ Lending Gets Federal Scrutiny

The Consumer Financial Protection Bureau is investigating the mortgage financing model that is viewed by many as often harmful for low-income buyers.

[interestrateripoff]

The Washington Post Accuses Stingy Americans Of Ruining Obama's Recovery

Dear broke American consumers which once made up the world's most vibrant middle class: please stop being such a nuisance and source of confusion to nice Op-Ed columnists at the WaPo, the WSJ and, of course, the Fed and their $4.5 trillion in direct injections into the offshore bank accounts of America's wealthiest 1%, and instead go ahead and splurge all your savings on trinkets, gadgets and gizmos you don't need. Only that way will Obama's recovery be truly complete.

[interestrateripoff]

Fed's Williams sees good outlook, 2-3 rate hikes this year

SACRAMENTO With the U.S. economic outlook "definitely looking good," the U.S. central bank is on the cusp of deciding whether to raise rates at any of its next few meetings, San Francisco Federal Reserve Bank President John Williams said on Friday.

[interestrateripoff]

Fed's Yellen says won't completely rule out negative rates

Federal Reserve Chair Janet Yellen said on Thursday that while she "would not completely rule out the use of negative interest rates in some future very adverse scenario," the tool would need a lot more study before it could be used in the United States.

If there is another recession the Fed will have to go negative because they are already at the interest rate floor. The next logical step is negative.

[R K]

Fed's Yellen says won't completely rule out negative rates

Federal Reserve Chair Janet Yellen said on Thursday that while she "would not completely rule out the use of negative interest rates in some future very adverse scenario," the tool would need a lot more study before it could be used in the United States.

If there is another recession the Fed will have to go negative because they are already at the interest rate floor. The next logical step is negative.

They didnt this time around. They massively increased the size of their b/sheet instead. NIRP as policy is dead in the water as ECB/BOJ have amply demonstrated.

[R K]

BlackRock® ‏@blackrock 13h13 hours ago

What our latest "Yellen index" may say about the Fed: http://******/1TgKISW

[interestrateripoff]

Fed Worries About Deflation But Pays Banks Billions Not To Lend QE Proceeds!?

In a world in which growth is slowing, is it not strange that the Fed (privately owned by the largest banks in the world) would institute a system of rising payments rewarding banks for not taking risk or lending money! This all tends to make believe that manipulation is the order of the day and the explanation is far simpler than most would believe...

[R K]

Fed Worries About Deflation But Pays Banks Billions Not To Lend QE Proceeds!?

In a world in which growth is slowing, is it not strange that the Fed (privately owned by the largest banks in the world) would institute a system of rising payments rewarding banks for not taking risk or lending money! This all tends to make believe that manipulation is the order of the day and the explanation is far simpler than most would believe...

Usual Zh convicted insider trader garbage

good explainer from Bernanke here:-

Does paying interest on reserves subsidize banks?

Reserves are an asset on banks’ balance sheets, and, like any bank asset, they must be funded by corresponding liabilities. The federal funds rate, which is what banks pay to borrow from other banks, is one reasonable measure of the marginal cost of funds to banks. Since the Fed’s action to raise rates in December, the funds rate has generally fluctuated around 37 basis points (a basis point is .01 percentage points). Consequently, we can safely say that the subsidy to banks implicit in the Fed’s interest payments can be no greater than the difference between the 50 basis points (one-half percentage point) the Fed now pays on reserves and the 37 basis points or so that banks must pay to finance their reserve holdings—that is, about 13 basis points (13/100 of one percent).

From an economic point of view, however, even 13 basis points is probably an overstatement of any subsidy. Here’s why: If the full marginal cost to banks of adding reserves was simply the funding cost, then a bank could borrow in the market at the fed funds rate, deposit that money at the Fed, and earn the higher rate of interest on reserves while taking no risk. In principle, this activity should lead the market-determined federal funds rate to be very close to the interest rate paid on reserves—indeed, that’s what many at the Fed expected to happen when Congress authorized payments of interest. The fact that there is a persistent differential between banks’ funding costs and the interest rate they receive on reserves suggests that there may be additional costs to banks of holding reserves, above the explicit marginal cost of funding.

It is not difficult to identify such costs. For example, banks are required to hold capital against even very safe assets, including reserves at the Fed, because of the so-called leverage ratio. Because equity capital is relatively more expensive for banks, these requirements increase the effective marginal cost of funding reserves. Similarly, the premiums charged banks by the Federal Deposit Insurance Corporation for insuring deposits are tied to the level of bank assets, including reserves; the extra premiums are another cost of increased reserve holdings. In short, the absence of bank efforts to obtain additional reserves at current interest rates suggests that much of the difference between the interest rate banks receive on reserves and their explicit marginal cost of funds is eaten up by other costs tied to holding reserves.

http://www.brookings.edu/blogs/ben-bernanke/posts/2016/02/16-fed-interest-payments-banks

[Errol]

Gaping Holes In The Government’s Retail Sales Report For April

The facts to do not fit the assertions above. The savings rate in this country is not “high” and wages are not growing. The Government may be reporting a high savings rate and growing wages, but that’s merely a product of statistical fiction.

http://investmentresearchdynamics.com/gaping-holes-in-the-governments-retail-sales-report-for-april/

[R K]

A Evans-Pritchard ‏@AmbroseEP

Another surprise. US Federal spending as share of GDP now lower than Reagan era. 20.5%. Obama socialism at work

[interestrateripoff]

Hiring Hurdle: Finding Workers Who Can Pass a Drug Test

As labor markets tighten, employers are having a harder time finding applicants free of drugs, especially marijuana.

[interestrateripoff]

Housing Agency Plans Mortgage Sale Reforms After Criticism

By MATTHEW GOLDSTEIN 12:58 PM ET

The new rules would come after months of criticism that the loan sale program has benefited private equity firms and hedge funds at the expense of strapped borrowers.

[interestrateripoff]

As Insurance Losses Mount So Do Refusals: "Sorry, We Don't Take Obamacare"

A McKinsey study shows Obamacare insurers lost money in 2014 and the losses doubled in 2015. Amazingly, the study concludes there’s nothing to worry about because “30 percent of insurers nationwide were profitable.” Meanwhile, outright refusals to accept Obamacare mount. “Sorry, We Don’t Take Obamacare” is now a frequent response.

[interestrateripoff]

Fed signals interest rate hike firmly on the table for June

[interestrateripoff]

Fed Is Seriously Considering Raising Interest Rates in June, Meeting Minutes Say

The central bank sent an unusually frank message to Wall Street, delivered in the official account of the Fed’s April meeting.

A Growth Rate Weighed Down by Inaction

Unless business and government do something to improve the economy’s capability, the United States will be stuck with anemic rates of growth.

[Noallegiance]

It's all ridiculous bolleaux.

The minutes still state that every option is possible. Why the world hangs on this shite is beyond me. Why these messages at spun as anything other than what they are is a mystery. How many more times? I mean, really?

In any other walk of life, years of "we might do xyz soon" would be met with derision. It's like the perpetual moaning of office staff year in, year out, who claim that things in the workplace are so bad that they're leaving. 10 years later they're still there and any ounce of credibility that they will take action has long evaporated.

Get with the program peeps.

[The Masked Tulip]

FYI, US banks stocks were on fire after the Fed minutes came out.

I'll let you figure out why.