Tomorrow, the U.S. Fed will make another indication of whether there is a pending late spring rate hike or not.
The word 'patience' is the talk of New York. Patience stated in this address suggest the Fed is backing off any rate rate for the foreseeable future. But hiking the rate by say 1/4% is high states global poker (IMO) for financial and commodity markets. Contagion is the risk to both global markets and the U.S. economy. It must be contained. Global central bankers are now in-unison cutting rates. The U.S. is the exception.
U.S. stellar unemployment rate of just 5.5% should garner a rate hike. But U.S. unemployment is much higher than 5.5% as the overall workforce is shrinking with little evidence of wage growth.
This has backed the Fed into a corner. The promise is for rates to begin to rise. But the question now is; can the U.S. absorb this shock without consequences and reality that the American recovery remains on crutches.
I bring this up as tomorrow is important. If the Fed holds off rates, the stock market bubble continues, the U.S. dollar could continue its mind boggling climb, crude oil prices could continue their drop and washout in precious metals continues. If the Fed indicates a hike, equities and the U.S. dollar may sell-off triggering a rise in crude and the Cdn dollar. The state of the Fed statement is even has a direct impact on our grain and cattle.
The risks are high . . . a faux pas by the Fed could have major economic consequences globally (IMO). But now its time. The Fed has talked-the-talked. Now it's time to walk-the-walk.
The word 'patience' is the talk of New York. Patience stated in this address suggest the Fed is backing off any rate rate for the foreseeable future. But hiking the rate by say 1/4% is high states global poker (IMO) for financial and commodity markets. Contagion is the risk to both global markets and the U.S. economy. It must be contained. Global central bankers are now in-unison cutting rates. The U.S. is the exception.
U.S. stellar unemployment rate of just 5.5% should garner a rate hike. But U.S. unemployment is much higher than 5.5% as the overall workforce is shrinking with little evidence of wage growth.
This has backed the Fed into a corner. The promise is for rates to begin to rise. But the question now is; can the U.S. absorb this shock without consequences and reality that the American recovery remains on crutches.
I bring this up as tomorrow is important. If the Fed holds off rates, the stock market bubble continues, the U.S. dollar could continue its mind boggling climb, crude oil prices could continue their drop and washout in precious metals continues. If the Fed indicates a hike, equities and the U.S. dollar may sell-off triggering a rise in crude and the Cdn dollar. The state of the Fed statement is even has a direct impact on our grain and cattle.
The risks are high . . . a faux pas by the Fed could have major economic consequences globally (IMO). But now its time. The Fed has talked-the-talked. Now it's time to walk-the-walk.
Comment