We’re Flying with Eyes Partially Closed into Turbulent Markets & Economy

But for the markets: “No Data is Good Data”

“NOTICE: Due to a lapse in federal funding this website is not being updated,” it says in big lettering against a bright red background at the top of the data sites of the Department of Commerce.

This morning, the Commerce Department was supposed to release crucial data for the housing market: sales and inventories of new single-family houses (“new home sales”). This includes sales and inventory figures, how many months of supply there was, and the median sales price of the new houses that sold. Today’s release would have been for sales that closed in December. But the Commerce Department is part of the shutdown, and no data was released.

This makes it the second month in a row that we have not seen national data on new home sales. The last month for which we received data was for October, released on November 28. And it was very lousy. So thank God that there is no data, because homebuilder stocks that had gotten battered by a series of lousy data have surged during the absence of data.

This morning, we were also supposed to get the report by the Commerce Department on “durable goods” with crucial data on orders and shipments in the manufacturing sector. But no.

This morning, we were also supposed to get the report on steel imports from the International Trade Administration, but it is part of the Commerce Department. The US is the largest steel importer in the world, and given all the hullaballoo about the tariffs on steel imports, it would be good to know for the industry and data watches alike what is going on. But there is no data on steel imports.

The Labor Department is still open, so at least we get those reports, including the monthly jobs report, weekly unemployment claims, the data around the consumer price index, etc.

Last week, we were supposed to get the preliminary data on retail sales for December, which would have given us some insights into the crucial holiday selling season, how consumers were holding up their end of the bargain to keep the economy moving along. But no data.

Last week, we were also supposed to get data from the Commerce Department on business inventories and housing starts, but no. Both are very important data points for the economy and the calculation of GDP.

We were also supposed to get data on international capital flows from the Treasury Department – the trove of data in the “Treasury International Capital” release. This includes the amounts of US Treasury securities that central banks of each country bought or sold. China and Japan, the two largest holders with a combined $2.1 trillion of Treasuries, have been net sellers. But someone has to buy because the Treasury Department is issuing an enormous amount of new securities to fund the ballooning deficits. This is data we closely watch because a lot depends on it. But no data.

And with the Treasury Department being shut down, there is no monthly “budget” of US government receipts and outlays. So we didn’t get that either.

Before then, we missed the “wholesale trade data,” including wholesale inventories which are ballooning and need to be watched. Rising inventories add to GDP, but when they balloon and get to the point that companies are starting to reduce orders to bring down those inventories, it triggers a downturn in the goods-based sector, including manufacturing. But no data.

No data on construction spending (Commerce Department), an important element in GDP.

And the trade deficit data, good lordy, just when trade has been near the top of our collective argue-list. And we’re flying blind about our trade data. The last data set was released on December 6, which showed that the goods and services deficit rose to $55.5 billion in October, with imports rising and exports falling.

We are also supposed to get data from the US Commodity Futures Trading Commission, including weekly “commitments of traders” data on positioning of currency, commodities, and financial contracts. The last weekly data was for the week through December 18.

Farmers and ag commodities traders rely heavily on a large amount of data from the US Agriculture Department. This includes the monthly report, “World agricultural supply and demand,” the last one of which (40 pages of mostly tables of detailed ag data) was released on December 11. But now, no data.

And soon the biggie: No GDP? On January 30, the Bureau of Economic Analysis is supposed to release its first estimate of GDP for the fourth quarter, but the BEA is shut down and will not update its data releases “until further notice,” as it says. Even if it reopens its shop beforehand, will its people have enough time to put the data together for the GDP report by Wednesday morning?

And another biggie: On January 31, the Commerce Department is supposed to release the data set for “personal income and outlays” for December. This is the all-important consumer spending data. Consumer spending accounts for about 70% of GDP.

It’s OK if this data blackout lasts a week or two. But now we’re starting to fly in this turbulent economy with our eyes partially closed.

And there are decision-makers who rely on this pile of data, and who have a large impact on the economy and financial markets, including the Fed. It has said a million times that it is “data dependent.” It has access to a lot of data, but a portion of the data that it is “dependent” on has been delayed and is not available for its next meeting on January 29-30.

There are positive aspects too: For example, in terms of the markets, it seems, no data is good data. The less data, the better. Keep your eyes firmly shut and have faith.

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  66 comments for “We’re Flying with Eyes Partially Closed into Turbulent Markets & Economy

  1. Ken
    Jan 25, 2019 at 1:12 pm

    Yes, how convenient the govt is shut down….but only the parts responsible for reporting the worst economic data.

    Such a fraudulent system, top to bottom.

    • Dale
      Jan 25, 2019 at 3:18 pm

      It is interesting that during this ‘shutdown’ the government is still spending 93% of what they did last year during the same timeframe. Accounting for inflation, maybe 10% less. Yet so much economic data is missing.

      • Proxmire
        Jan 25, 2019 at 8:06 pm

        Every time we go through this charade, we hear about the “non-essential” portions of the government. And of course, as a taxpayer, I always want to ask why we have to pay for non-essential government?

        Of course, this time we learned that handing out oil and gas leases is now an essential part of the government functions. But apparently giving out bad economic news is non-essential.

        • sierra7
          Jan 26, 2019 at 11:24 am

          It’s amazing how there is always the outcry of “….too much government!”….How about we eliminate all these public services to the “markets” and let the private sector produce their own stats??????

    • HMG
      Jan 26, 2019 at 1:58 am

      “Eyes Wide Shut” perhaps ?

  2. ArcticChicken
    Jan 25, 2019 at 1:23 pm

    A while back the fuel gauge on my truck broke and was stuck at about half full. I was happy as a clam, until the tank ran dry.

    We see what we want to see, sometimes. Especially when there’s nothing to tell us otherwise!

    • MaggieD
      Jan 26, 2019 at 9:04 am

      This is an awesome, instructive metaphor for both the lacuna in essential govt data metrics, and for what I believe is the imminent destination for this – to use an obnoxious au courant parlance – fake news-fueled “bull” market.

  3. Jan 25, 2019 at 1:48 pm

    Looks like America is headed for negative interest rates like Europe.

    • Iamafan
      Jan 25, 2019 at 3:10 pm

      Wait, there’s some good news about the Fed.
      WSJ is reporting “Fed Officials Weigh Earlier-Than-Expected End to Bond Portfolio Runoff”
      Wow

      • JZ
        Jan 25, 2019 at 3:31 pm

        December FOMC meeting, Powell looked like Volker to me.
        Jan when the Three chat on TV, Powell looked like a FAKE Volker to me.
        Today, Powell’s image shrunk into smaller than Yellen.
        It is all Trump now. Powell can be ignored.

        • Bansky
          Jan 25, 2019 at 8:09 pm

          Hmmm, considering that Pelosi just owned Trump and left him crying on the floor like a little boy, that Powell guy must be looking downright tiny.

        • Patrick
          Jan 26, 2019 at 2:53 am

          I always suspected Powell’s hawkish nature was merely an opening bid in a game of bluff poker but was amazed at how quickly he folded. That said, I also suspect that the only concession markets will get out of him during next Wednesday’s FOMC is the word ‘Patient’. Cry baby markets will want more so I suspect they (along with Gold & Silver traders) will be disappointed and we’ll see a slow burn tantrum into the March 20 meeting (barring any ‘concrete’ dovishness before then).

          One way or another, markets will extract a pause, rate cut and eventual re-wind of the balance sheet from America’s quintessential market whore. It’s just gonna take more whining and crying than bulls originally thought necessary.

      • MaggieD
        Jan 26, 2019 at 9:20 am

        If it weren’t such a predictable harlequin narrative from the full-on geisha fluffers of “financial-wood” media (I keep thinking of Caesar from the Hunger Games, giddily driveling homily about the condemned with the condemned), these grandiose *editorial* pronouncements of free Fed candy – for a diabetic market – would be enraging. Things being what they are – I’ll just keep a lot of cash for when this dead market walking (IMO) goes into diabetic coma.

      • Jdog
        Jan 26, 2019 at 12:13 pm

        How is that good news? The end of the fed and its artificial market manipulation would be good news.

    • MC01
      Jan 26, 2019 at 4:25 am

      In spite of my cynicism, I doubt it.

      The Yellen Fed could have done it, but instead preferred to sit on the fence and look at how Japan and Europe were faring. The short term stimulus was not worth the consequences, which include a slide towards China-style addiction towards larger and larger rounds of stimulus.

      Now, if you told me they are looking on how to fold without looking like hostages to a bunch of grown men and women acting like spoiled children throwing a temper tantrum it’s another matter and I agree on that.
      China has intervened somewhat earlier than I expected, dousing their credit markets with liquidity and, how they are called?, “perpetual bond swaps”.
      The others are most likely all looking on how to do the same without looking like complete fools: folding on monetary policies because stock markets dip very slightly or conglomerates do not report double digit growth is not exactly glorious nor the action of somebody in control.

      My bet is (literally) on the European Central Bank to fold before anybody else, most likely by resuming to enlarge their corporate bond purchase program. I’ve seen slugs with a far more robust backbone than these people.

  4. lenert
    Jan 25, 2019 at 2:14 pm

    Gotta wait til it finishes booting.

  5. akiddy111
    Jan 25, 2019 at 2:28 pm

    Top Wall Street economists get paid 7 figures to analyse this stuff. Both David Rosenberg and Bill McBride had little to write about so far this month.

    They are all playing Fortnite instead. It’s hilarious !

    • polecat
      Jan 25, 2019 at 8:35 pm

      Maybe everyone’s at Carnival .. with there eye$ wide $hut !

  6. Iamafan
    Jan 25, 2019 at 2:34 pm

    Trump has announced a tentative deal to reopen the government for 3 weeks until Feb. 15, according to ZH.
    Better get your data soon.

    • C
      Jan 25, 2019 at 6:00 pm

      So time to buy in three weeks. Duly noted! :D

      Also, government data isn’t *that* crucial. Other sources outside of the government (including data from other countries for the international economy) are available. And, of course, this government shutdown doesn’t have much of an impact on individual businesses, which we’re buying to hold *in the long run*.

      Uncertainty lowers stock prices in the short-term. I’ve already spent a load of dry powder, and am waiting for this sharp upswing to fall again as the market consolidates.

  7. TrojanMan
    Jan 25, 2019 at 2:48 pm

    Wolf, are you going to fun a story about Fed governors talking to the media about ending QT? It’s looking more and more like the “fed can never raise interest rates or reduce its balance sheet” crowd is materially correct in their assessment. All of a sudden the Fed does not seem to have the confidence they did 6 months ago.

    No wonder no one is buying homes since there is no telling what direction the Fed is heading. This waiting game is taking too long. Either admit you are trapped and interest rates will be low forever, or say we have a bunch of bubbles that need to be popped and then do it.

    • Jan 25, 2019 at 5:29 pm

      TrojanMan,

      Last time I wrote about it was on Jan 11. The WSJ article today used my concept and charts to build its own chart to show the same thing, namely the relationship between assets and liabilities (mostly currency in circulation), and why the Fed will NEVER go back to a balance sheet as it was before QE. In my article on Jan 11, my estimate for the lowest level that the Fed might let the assets on its balance sheet go was $2.4 trillion in five years. This would be the minimum possible. Here is the article:

      https://wolfstreet.com/2019/01/11/feds-powell-balance-sheet-to-be-substantially-smaller-how-small-he-gave-big-clues-my-dive-into-dynamics-w-charts/

      There is a very good chance the Fed will try to get rid of its MBS entirely. Fed heads have been suggesting that there is a consensus building in that direction. This would require an adjustment to its Treasury roll-off strategy.

      The Fed is likely to switch to shorter-term Treasury securities, such as bills, of which it has none currently, and reduce the amount of long-term securities on its balance sheet. It would dramatically lower the average maturity on its balance sheet, which is currently over 8 years. This would be the opposite of Operation Twist.

      So getting rid of MBS and replacing long-term securities with bills would be big changes to the balance sheet, even if the current level were the final level. Those changes would impact long-term yields.

      But from everything I have seen, including today’s WSJ article, it looks like the Fed will bring the balance sheet down further from where it is today, but it might start communicating more precisely where it wants to go with this in terms of level, maturities, and MBS.

      The new level will be somewhere between $2.4 trillion and $4 trillion. And until we get more substantive info from the Fed, that’s really all I know.

      I expect some kind comment from Powell during the next post-meeting press conference. He is going to get bombarded with questions about this, and that will give him an opportunity to start laying out some elements of the new plan. Maybe we will even get a mention of this discussion in the statement. And I expect there to be a longer mention in the minutes of that meeting.

      • TrojanMan
        Jan 25, 2019 at 6:47 pm

        As always, thanks a ton Wolf! I guess we will just have to wait and see!

      • secant
        Jan 25, 2019 at 6:53 pm

        Krishna Guha, head of global policy and central bank strategy team at Evercore ISI, expects the final size to be around $3.5 trillion. So only $600 billion left, much less than the $2.5 trillion balance some estimated for July 2021 (around 10% higher than paper-dollar levels).

        So does the fed want political cover from being blamed for the next recession? Why drop hints so soon on stopping QT, to create the last phase euphoria that has been missing? Why is a normal, healthy 20% market drop so scary to all the major players pulling the levers? What is wrong with a natural cleansing recession? It seems like everyone is more concerned about their hold on power and less concerned about the future of the country, as “mean aversion” will only work so long before “mean reversion” will be forced on the global economy…or is this time “forever different”?

        • Jan 25, 2019 at 9:00 pm

          Great questions. It seems to me these kinds of questions and concerns will dog us for a long time :-]

        • Michael Gorback
          Jan 25, 2019 at 9:17 pm

          >> It seems like everyone is more concerned about their hold on power and less concerned about the future of the country <<

          "People of privilege will always risk their complete destruction rather than surrender any material part of their advantage." — John Kenneth Galbraith

        • sierra7
          Jan 26, 2019 at 11:40 am

          Secant:
          “….. “mean reversion” will be forced on the global economy…”
          Bingo! U get the prize!
          And, the sooner it happens and is “embraced” the sooner the “world economy” gets to reality. Otherwise it continues to be “smoke and mirrors”…..

      • Erle
        Jan 25, 2019 at 10:16 pm

        Did not the FED buy MBS freely at par when anyone knew that it was severely compromised and fraudulent.
        They telegraphed their pair of deuces, and displayed their hole cards and bluffed with incomprehensible piles of chips so that the insolvent banks could “win”.
        Who buys this MBS?

        • Jan 26, 2019 at 12:01 am

          Erle,

          The Fed now only holds MBS that are guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. The first two are government-backed, and the third IS the government.

          So these MBS are good. There is very little credit risk for the Fed, given the government guarantee. The market for them is fairly liquid. And they’re good low-risk investments, given the government guarantees.

          Given the low risks, the yields are very low (this is not 2009 anymore), which shows that there is a lot of interest in them.

          But the Fed for now actually doesn’t sell them. It just collects the money when they mature or when principal payments are passed through. So they “roll off” the balance sheet naturally.

        • Jan 26, 2019 at 11:03 am

          The Fed calls them “deferred assets” if held to maturity, but they are dependent on a stream of income which is not guaranteed. In another mortgage crisis where does that money come from? Should homes prices fall dramatically those mortgages will never mature.

      • AV8R
        Jan 26, 2019 at 9:56 am

        I think their statement and the elements of their new approach hinge on your final point in that masterful piece: Fed Total Assets % Above Dollars in Circulation. I expect the Fed to change their narrative away from the prison of those 2 ideas to a third more palatable one: Time.

        On a longer timeline the chart becomes less daunting. In the meantime selling more short term debt to pay off longer term debt makes sense as long as some unforeseeable tipping point isn’t breached.

        My question is this: Acting in the opposite of Operation Twist, is there a historical average interest rate below which a “dramatically lowered” average maturity becomes detrimental to the economy??

  8. Rowen
    Jan 25, 2019 at 3:16 pm

    I’ve said from the beginning of the Shutdown, that DJT didn’t want the wall, he wanted the shutdown, especially after the Mnuchin Meltdown.

    pretty much all macro data from everywhere for December has been much worse than anticipated.

    • akiddy111
      Jan 25, 2019 at 3:30 pm

      I’m sorry but that sounds like a far fetched conspiracy theory.

      • alex in san jose AKA digital Detroit
        Jan 25, 2019 at 10:29 pm

        Really? With Mr. Government Shutdown, Newt Gingrich, taking a major part in DJT’s cabinet?

    • MD
      Jan 26, 2019 at 5:27 am

      Interesting theory – the complete shutdown of government so that as things begin to creak, everything has to be put into the hands of the private sector.

      Or put another way: corporate fascism.

      I wouldn’t put anything past the sociopaths who now seem to in control.

    • LessonIsNeverTry
      Jan 27, 2019 at 11:21 am

      And used up all his political capital to do so, while being humiliated and becoming a lame duck? Makes sense….

  9. timbers
    Jan 25, 2019 at 3:28 pm

    “Fed Officials Weigh Earlier-Than-Expected End to Bond Portfolio Runoff”

    $Ka-Ching$

    I bet Powell is banking Ka-Ching in the private sector when he’d done at the Fed. Stopping rate normalization and keeping those trillions floating around to drive up asset prices is just making fertile grounds for whence Powell came from, and where he may be planning to return post Fed.

    Here’s Wikipedia:

    From 1984 to 1990, Powell worked at Dillon, Read & Co., an investment bank, where he concentrated on financing, merchant banking, and mergers and acquisitions, rising to the position of vice president.[13][15]

    Between 1990 and 1993, Powell worked in the United States Department of the Treasury, at which time Nicholas F. Brady, the former chairman of Dillon, Read & Co., was the United States Secretary of the Treasury. In 1992, Powell became the Under Secretary of the Treasury for Domestic Finance after being nominated by George H. W. Bush.[13][15][12] During his stint at the Treasury, Powell oversaw the investigation and sanctioning of Salomon Brothers after one of its traders submitted false bids for a United States Treasury security.[16] Powell was also involved in the negotiations that made Warren Buffett the chairman of Salomon.[17]

    In 1993, Powell began working as a managing director for Bankers Trust, but he quit in 1995 after the bank got into trouble when several customers suffered large losses due to derivatives. He then went back to work for Dillon, Read & Co.[15]

    From 1997 to 2005, Powell was a partner at The Carlyle Group, where he founded and led the Industrial Group within the Carlyle U.S. Buyout Fund.[14][18]

    After leaving Carlyle, Powell founded Severn Capital Partners, a private investment firm focused on specialty finance and opportunistic investments in the industrial sector.[19]

    In 2008, Powell became a managing partner of the Global Environment Fund, a private equity and venture capital firm that invests in sustainable energy.[19]

    Between 2010 and 2012, Powell was a visiting scholar at the Bipartisan Policy Center, a think tank in Washington, D.C., where he worked on getting Congress to raise the United States debt ceiling during the United States debt-ceiling crisis of 2011. Powell presented the implications to the economy and interest rates of a default or a delay in raising the debt ceiling.[18] He worked for a salary of $1 per year.[2]

    Other’s have watched and figured out how it works. Clinton blazed the trail in the perhaps the most spectacular recent example when he finished his terms, and Obama watched and learned.

  10. OutLookingIn
    Jan 25, 2019 at 3:30 pm

    Look for Clues – Globally

    The Baltic Dry Index (BDI) chart (daily) suffered a ‘death cross’ on December 10, 2018 at 1388.32 points. Now currently sitting at 939.00 points, a loss of 450 points in 46 days. This does not bode well for global shipping and hence, the global economy.
    The commodity indices CRB and DBC are both struggling on a bounce from the bottom, as are the transports. Again, this does not bode well, for if the economy is doing as well as the Wall street hype would have you believe, then these stats would tell a different story!
    Stumbling along with eyes wide shut!

    • akiddy111
      Jan 25, 2019 at 3:39 pm

      Intel reported weak guidance yesterday. Starbucks had good holiday sales.

      Earnings reports so far are “mixed to a little weak”. Not exactly Armageddon !

      • Ididsa
        Jan 25, 2019 at 4:17 pm

        @akiddy111

        Please note these are based on downward revised earnings forecasts. The hurdle has been set quite low. I am surprised there are still misses, especially on revenue forecasts which have already been slashed.

      • MD
        Jan 26, 2019 at 9:20 am

        What IS ‘armageddon’ though is the debt being run up by those people sat in Starbucks funding their coffees and muffins via credit card.

        May not be apparent quite yet, but there’s a big difference between the prosperity driven by savings and disposable income, and the ‘prosperity’ driven by going further into debt.

        The fact the politician and his/her financier chums choose NOT to differentiate between these growth drivers is what’s storing up the problems. Too much of an ‘inconvenient truth’ to be faced.

  11. Jan 25, 2019 at 3:48 pm

    Our state assemblyman (won by a few hundred votes) just switched to the Dem party stating lack of confidence in potus, and a large number of military personnel in his district. We had an election now people vote with their feet.

  12. Jon Dough
    Jan 25, 2019 at 3:55 pm

    Really don’t have anything to say; this looked like the perfect time and place! Good luck to all…………….

  13. Ididsa
    Jan 25, 2019 at 4:22 pm

    “The Labor Department is still open, so at least we get those reports, including the monthly jobs report, weekly unemployment claims, the data around the consumer price index, etc.”

    Great permissive leak on only the good data. I feel like we are living in a different country. No longer free market capitalism, no price discovery, no longer full disclosure of economic info from big brother. They bash China for falsifying data. At least they are still releasing economic data.

    • Unamused
      Jan 26, 2019 at 1:56 pm

      If it’s unreliable data it’s called investing. If it’s a wild-ass guess it’s called speculation. If it’s reliable data it’s called insider trading.

      “You pays your money and you takes your choice.”

      – Aldous Huxley, preface to Brave New World

  14. Atu
    Jan 25, 2019 at 4:25 pm

    In other countries the data delay has had various effects. Here staff of a main German economic processing unit have used the resulting spare time to generate a unique interpretation using the little information that has been made available to them.

  15. KFritz
    Jan 25, 2019 at 6:47 pm

    The title of this offering calls to mind the famous Far Side cartoon, “Say…what’s a mountain goat doing way up here in a cloud bank?”

  16. Jan 25, 2019 at 7:25 pm

    The government may be AWOL, but the data is still there if you bother to look. Homebuilders have certainly benefited from the lack of govt data releases. Today D.R. Horton reported that all is not well in middle America. Doesn’t say much for the strength of the “recovery” if you have to shave more than $7500 off the price of new home order to get a contract signed. Lowest average price for net sales orders for one of the country’s largest home builders in 5 years… and we haven’t even seen the recession yet!
    https://aaronlayman.com/2019/01/d-r-horton-orders-miss-expectations-average-prices-5-year-low/

  17. van_down_by_river
    Jan 25, 2019 at 9:58 pm

    I’m less curious about the data the government isn’t publishing and more curious about Federal Reserve Corporation information I can’t find.

    Two podcasts I listened to today said the Federal Reserve has announced they are about to reverse their QT policy. I have searched all over the web and I don’t find any Fed official making this announcement.

    Has anyone heard anything official regarding Fed QT policy reversal. If this is true it is huge news, it would be an admission that the Fed is, after all, monetizing government spending and we could be closing in on a currency crisis – disastrous.

    If we now stand on the edge of a dollar collapse what asset would be a good bet to retain value, stocks may take a hit in real terms. I’m not a gold true believer either. I don’t want to be alarmist but if the Fed is throwing in the towel after such a weak attempt at tightening I think we are in for bad times. Has anyone else heard anything, if so where?

    • Erle
      Jan 25, 2019 at 10:23 pm

      Glod was up twenty-two today after a few weeks of keeping it well under 1300. Funny thing about Palladium being up 44 with a weak automotive sales environment.

      • OutLookingIn
        Jan 26, 2019 at 2:15 am

        Erle –

        Spot price for palladium today at $1357/oz
        Yet, today’s June 2019 futures contract at $1260/oz
        So… wazup?

    • Jan 25, 2019 at 11:53 pm

      Hi van_down_by-river,

      It seems you’ve come up for air :-]

      The Fed isn’t going to “reverse” anything. So don’t worry. However, they might announce how fast and/or how far they will go with QT, and they might change the mix and maturities of their balance sheet, such as bringing MBS to zero and shifting to shorter term Treasuries (opposite of Operation Twist), which would raise long-term yields and might take pressure off short-term yields.

      • van_down_by_river
        Jan 26, 2019 at 6:55 pm

        I have been quietly enjoying your articles while keeping my opinions to myself – everyone’s got opinions they don’t often mean much.

        BTW I tracked down the rumor about the Fed ending this monetary tightening cycle. I comes via the WSJ.

        From the article titled: Fed Officials Weigh Earlier-Than-Expected End to Bond Portfolio Runoff:

        “Federal Reserve officials are close to deciding they will maintain a larger portfolio of Treasury securities than they’d expected when they began shrinking those holdings two years ago, putting an end to the central bank’s portfolio wind-down closer into sight. ”
        From the article: Fed Officials Weigh Earlier-Than-Expected End to Bond Portfolio Runoff”

        For me, that is scary stuff – adios retirement. Rumors are just rumors but consider the source.

    • OutLookingIn
      Jan 26, 2019 at 2:09 am

      van_

      It is surmised that the Fed at their next meeting, will adjust the redemption schedule, and alter the redemption caps.
      They are attempting to keep interest rates from rising too fast. Too late.

  18. Iamafan
    Jan 26, 2019 at 6:38 am

    I think there’s too much noise today, that we’re having a tough time seeing the forrest from the trees. The Fed has been deliberating on how much assets it will keep. To me, the real question is what to they need to do to get their policy tools back? If you’re the Fed, that’s the problem that can keep you awake at night.
    After QE the Fed has had to tinker with its interest setting money supply tool because the primary lender big banks had too much excess reserves that they did not need to borrow and lend to each other overnight to meet required reserves anymore. So they had to come up with a new tool — IOER and ON-RRP — to control interest and money supply. They set IOER as the rate by which banks will keep their massive excess reserves at the Fed instead of using it to increase inflation.

    I’m not sure the Fed is comfortable with the notion of paying the banks IOER or else they will have to battle massive inflation because the banks can mutiply its excess reserves by 10x if they really want to. I think the Fed wants its old tool back — the setting of overnight lending rates. To get that back, the excess reserves must drop to a level that the banks need to borrow and lend to each other again. I think this is really the level of QT they want. Of course, getting that level back is hard to do.

  19. Maximus Minimus
    Jan 26, 2019 at 1:12 pm

    How about a FED shutdown, and let the market decide interest rates?

    • Unamused
      Jan 26, 2019 at 1:41 pm

      Financial markets are corrupt and irrational, so that would be disastrous.

      Both hands on the wheel, eyes on the road, stay out of the ditch. It’s going to be a bompy ride.

  20. Unamused
    Jan 26, 2019 at 1:33 pm

    Ignorance is bliss. Hence its importance as a national priority.

    So far as TPTB are concerned, the profitability of the status quo depends on the perpetuation of at least eight myths: that the US is a democracy, that the voting system is legitimate, that independent news keeps the rulers accountable, that the judiciary is independent and the law is your friend, that buying will make you happy and hard work makes for a better life. That you are free. Half-truths, at best.

    Flying blind in the absence of government data because of the shutdown won’t make much of a difference because a lot of that data is massaged, other data lacks much predictive value, and a lot of decision-makers second-guess or ignore the data anyway.

    Knowledge is only useful if the information is good, but there is also the ability to distinguish the good from the bad, the opportunity to use it, and the ability to use it. Like George said, it don’t come easy.

    • Maximus Minimus
      Jan 26, 2019 at 3:56 pm

      Another one to the list: debt doesn’t matter.
      True information only has value, when you are willing to act on it. E.g. when the data comes out bad, the stock market moves higher on bets of more easing. The financialization sector has decoupled from the economy.

  21. Dann E. Kroeger
    Jan 26, 2019 at 5:30 pm

    Why do we need monthly data? Everybody spawns over it and makes too much of a short term period. What does a month this year over last year mean? Not much – one needs to be cognizant of special circumstances then and now. As a start, I suggest we gather data quarterly and reduce expense.
    We have be told for 10 years that we don’t have inflation. Fiddle. Any senior citizen that pays utilities and buys groceries know this is hogwash. Both have nearly double. If we can’t get is right monthly, maybe, just maybe, we might get better information. Four times a year is plenty!

  22. Horsebox
    Jan 26, 2019 at 7:01 pm

    The only ‘Data” that need be considered is what the Fed is doing.

    Read the papers folks, quantitative tightening will be ending early, hence the stock rally is going to begin again in earnest. The end of those balance sheet roll-offs is the same as a major rate cut.

    I find it amusing that the bears think that the US government would allow our markets to tank like Venezeula.

    Everything has changed for the US markets.

  23. Eric
    Jan 26, 2019 at 11:02 pm

    Fed workers taking donations of free food for missing a months pay should tell us all we need to know. What condition would this country be in if massive layoffs shocked the economy? These aren’t even the lowest wage workers we are talking about.

    This boat is full of holes and patches are starting to leak the Fed will be quick to keep it a float as long as possible but confidence on a global scale is not easy to address. The question is always, how bad will this effect our economy? I doubt any of them have any idea but it interesting to watch them all point upwards as if we can not come down hard. They all say invest for the long term the economy is doing great. When will we look at financial strapped Americans and others across the globe and realize the bulk of the wealth at the top is very subject to the debt held by those across the spectrum.

    I question job growth numbers and sometimes think it’s a political stunt to give us some confidence, I question a lot of things since nothing ends up as predicted. I’ve got a good nest egg in gold and I’m far too nervous about stocks and growth forecast to think about being a trader at this time.

    The debt will likely never allow us to see interest rates much higher then they are now. We will likely keep borrowing to pay debts even though we all know that will not end well. We will drive the wheels right off this machine and will likely just get a new set of wheels to do it again…

  24. LouisDeLaSmart
    Jan 27, 2019 at 12:27 pm

    \\\
    Wolf,

    if I wanted to read books that are as mind bending as your articles, what would those books be? Do you have any suggestions? Any favorites? The topics do not have to be necessarily related directly to economy and the economic thought.

    Thanks
    \\\\

    • Jan 27, 2019 at 12:56 pm

      “…mind bending” as my articles??? Wow, thanks. But in terms of books, I’m out of the loop since I no longer have time to read any books — this site and the research needed use up every free minute I have :-]

      • LouisDeLaSmart
        Jan 27, 2019 at 1:07 pm

        \\\
        To explain the adjective “mind bending” – My brain was trained to think in a certain way about the economy and value. Once I started reading and understanding your articles, it showed me how wrong I was…thank you mainstream education and corporate environment! So it did bend my mind in, what I believe today is, the right direction. A direction of data, objective thought and analysis.

        Thank you so very much!
        \\\

        • Jan 27, 2019 at 8:34 pm

          I totally understood that this was a huge compliment (at least in my imagination), and I meant to express appreciation for that (without cynicism here).

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