Thursday, June 18, 2015

Fed and EU Can Kickers

The EU is notorious for kicking the can on Greece and giving them bailouts, extensions, etc.  Well, they might stop the can kicking before the Fed stops their can kicking.  Yes, the Fed is even more notorious for their can kicking of rate normalization.  The Fed keeps projecting rate hikes in the future, and when the future date gets closer, they kick the can to a further out date.  And yet the media buys it up, believing their forecasts and projections for rate hikes.  The market doesn't buy it.  And the market has been right.

The yield curve steepened massively yesterday after the Fed announcement, as the market gave up on any hope for a timely rate hike, and the 5 yr Treasury note shot out of a cannon, while the 30 year lagged badly, although both rallied.  The market clearly doesn't believe the Fed will raise in September, and is even giving a rate increase by December about a 50/50 chance of happening.

If it hasn't been clear for the last 8 years, the Fed is screaming:  we are market whores, and will not raise rates when equities are falling, even if they are just European equities!  Those who are long term dollar bulls are living in a fantasy world where the Fed actually raises rates actively.

I am waiting patiently for a dip to buy, and only a Greece default will give it to me.  So I am hoping for a Greece default so I can buy on the cheap and ride the rip higher.


MM111 said...

Even 2080 looks far away now.

Market Owl said...

S&P is just too strong. The train has left the station, leaving me behind, and even those stuck in those crappy European equity ETFs and futures.