“None and Done”: Fed Flip-Flopping is a Confidence Killer

Christine Hughes, Chief Investment Strategist, OtterWood Capital, mocks the Fed’s decision yesterday as “none-and-done.” No one knows what’s next. Confusion reigns. It hit the markets hard today, and bank stocks even harder.

“Flip-Flopping is a confidence killer,” she says in this brief video:

This Chart Shows: Investors Are Losing Faith in the Fed. Read… A Change in Market Dynamics I Find Particularly Troubling

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  15 comments for ““None and Done”: Fed Flip-Flopping is a Confidence Killer

  1. Sep 18, 2015 at 5:21 pm

    More of a confidence killer is the realization nobody in charge knows what to do or how to do it.

    Raise rates? Impossible, the market is against it. Lower rates? Impossible due to lower bound. Do nothing … proof the bosses are incompetent.

    How to fix: a) put new people in charge, b) enforce stringent … energy and resource … conservation.

    Nothing else will even pretend to work. Do nothing and the most stringent forms of conservation occur ‘as if by magic’ … see; ‘Syria’.

  2. hoop
    Sep 18, 2015 at 6:11 pm

    How will obamacare effect next year ? More costs for health care is less import is good for GDP. More USD stay in the USA which can be used to pay down debt. Also it can be used to lever via new debt into increasing investments in USA. Also good for GDP. By the way the own-risk goes up under obamacare this means less USD to buy import goods. Again good for GDP. So maybe America not export its self out off debt but reduces imports to go out of debt.

    • Michael Gorback
      Sep 18, 2015 at 6:22 pm

      GDP growth per se isn’t a good measure. You can generate a lot of GDP by paying people to dig holes and fill them back in.

      Health care contributes to GDP sort of like government spending does. It doesn’t create new wealth like mining iron, growing wheat or building houses. Like government spending, increased healthcare spending is a drain on the economy.

      • hoop
        Sep 18, 2015 at 7:13 pm

        I agree partly. A part of nearly every bodies costs during the time they are digging holes :-) is spend on healthcare. This spending is somebody else his income. This is how we get a higher velocity of the money. And this is part of the traditional calculation of GDP. The same counts for bars and yes prostitutes. :-) Maybe it was more simple to life and calculate GDP in the time of the cold rushes in California. You dig a hole found a commodity and exchanged this to spirits and pussy.

  3. Michael Gorback
    Sep 18, 2015 at 6:14 pm

    What concerns me the most is that so many people in finance and economics are terrified of the effects of a measly 0.25% hike. If something that small can tear apart the whole system then we’re in a lot if trouble.

    The banks want a rate hike, yet they didn’t one. How bad do things have to be for the Fed to go against the wishes of its overlords?

    • hoop
      Sep 18, 2015 at 7:27 pm

      I am not afraid and also not surprised. The exporting countries are collapsing. Because the importing countries are indebted till over their ears. So people in these collapsing countries (not only the locals but also private persons and companies from abroad ) want to get out of their investments and sell. Take for example the steel industry in China. I believe they produce more than enough steel to supply the whole world 2 times. But by selling and getting the local currency you are not out of trouble. Because the governments all around the world are playing the game from the same book. ‘’Lord Keynes and How to Steel from the People(with money)’’ So they change to USD or …….. Gold and ……. So Yellen’s Fed sees a tsunami of USD rolling in. So the supply in money is higher than demand for money. So the interest rate stays at zero.

      Maybe next year Obama care can absorb some of this excess money. That was the reason why I asked my question. If so we might see rising interest rates.

  4. MAS
    Sep 18, 2015 at 8:15 pm

    It’s so simple to stop. Make Lobbyists illegal. Make donating to a political party or individual or campaign illegal by these lobbyists, Unions and corporations. Problem solved for the most part because I know there will always be some a-hole who thinks he’s smarter.

    As far as the interest rates go you could have ZIRP for another 10-20 years. Which will make all assets bubble to extremes. Which is what they want. Why RE people tell you to ” get in now while you still can “. In the end though it will all collapse so really what’s the point except to make a few people super rich and even they will lose out in the end. Unfortunately no one has told them that you can’t take money to your grave !

  5. Uncle Frank
    Sep 18, 2015 at 8:19 pm

    Janet Yellen is Lucy. The rate hike is a football. And Charlie Brown symbolizes all of us.

  6. Paulo
    Sep 18, 2015 at 10:41 pm

    I bought my first house in ’79. I remember quite well when my 9% mortgage had to be renewed at 18%. Furthermore, I made crap wages and lost my job in 81 due to a slowdown in forestry. My wife was a stay-at-home mom and I had two kids. I had to work away from home in 3 month stretches interspersed with cash construction jobs. And now they talk about fearing .25% rate increase? If the economy is that fragile maybe it’s high time to blow it up and start over. I’m tired of being screwed over with my savings and GICs. Let others take a hit instead of those who worked hard and saved for retirement. Personally, I hope the market drops 1,000 pts on Monday.

  7. ML
    Sep 19, 2015 at 12:23 am

    Here in the UK and speaking as a saver myself, I am well aware of the low interest rates my bank pays on my money – i get just over 2% tax free. But it is not necessary for the bank to pay me more for borrowing my money because it can get what it needs from the wholesale money for next to nothing. Interest rates woukd have to rise if the central banks were to stop quantative easing. Their Interference with market forces is what has got us into such a financial mess.

  8. hidflect
    Sep 19, 2015 at 3:33 am

    Christine knows her stuff. She’s worth 10 bloviating Jim Rogers.

  9. uniformity is our strength
    Sep 19, 2015 at 6:01 am

    There are more welfare recipiants and more people who need asset prices to go up every day. We are passed the point of no return. The money printing is not going to go away. It is only going to get worse. The only people against it are a very small group of savers who have their money in the bank. Everyone else is against sound money. So do the math.

  10. Spencer
    Sep 19, 2015 at 6:43 am

    We have gone long lampposts and hemp.

    Cheers

  11. unit472
    Sep 19, 2015 at 9:44 am

    I did not know Zhou Xiaochuan was on the FOMC and had the deciding vote but it appears the PBOC Governor has a veto over Fed policy.

    While I can appreciate the Fed does not operate in a vacuum and it might be wise to consider global economic conditions, nonetheless, that is not part of the Fed’s mandate so, once again, we are getting ‘mission creep’ with no authorization or legal basis behind it.

  12. Julian the Apostate
    Sep 19, 2015 at 2:10 pm

    The Fed truly has become a toothless wonder. The lady has stated the obvious but even that is so shocking today in our hypersensitive times that by definition it becomes an act of courage. Good for her.

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