I promise not to become another Fed watcher as there are far too many already. But the spectacle of late is too bizarre and terminal not comment. The Fed minutes once again brought out the Yellen (yellin’) wolfers. The ploy utilized is a routine whereby “several participants” comment on stretching for yield, overvalued credit and equity levels.
Fed meetings minutes revealed that a “couple” members backed a July rate hike. One, Esther George, called herself out as a hiker. George has not been on the hawkish rubber-chicken circuit, where actually more than “several” others have been warning of complacency. “Several” are concerned about financial risks from low rates. “Some” anticipated that economic conditions would soon warrant taking another step in removing policy accommodation. The members “generally” paid special attention to inflation data, which has run over the Fed’s target for nine straight months. Members in July were “split” on whether a hike is needed “soon.”
Yes, tapering a Ponzi scheme has its challenges. No wonder the multi-billionaire cabalists are heading for the hills. Trump’s friend, adviser and stated choice for Treasury Secretary Carl Icahn yesterday stated, “A day of reckoning is coming.” Icahn is actively short the market. But paper algos don’t surf, they play word games with Yellen wolfers. The complacent odds of a FOMC September rate hike stayed unchanged at 15%. Bonds and stocks advanced.
I speak American English, but I still double checked the dictionary for the meaning of the word “several.” It means more than two but not very many. So, to a computer algo without human intelligence, this means three or maybe four. The algo factors nine votes total and apparently concludes the Yellen wolfers can’t carry the day? Thus, the algo remains complacent and chooses to ignore the fact that “several” Fed mucky mucks are “concerned about market complacency.”
Elsewhere in the real world of supply and demand and based on TIC data, foreign investors — both official and private — were sellers of $32.9 billion worth of Treasury notes and bonds in June. China reduced $28.0 billion, Japan $13.2 billion and Hong Kong $10.8 billion. The largest buyer in June by far was the Cayman Islands (aka algos, slingers, drug traffickers and hedge funds-see Treasury’s quid pro quo arrangements with criminals) with purchases totaling $28.3 billion. Treasuries custodial holdings of foreign central banks has fallen about $150 billion year to date.