Could the Fed Pull a Deep State Surprise?

It is common-consensus in the media today that the Fed – which gavels in this morning and announces rates tomorrow at 2 PM Eastern  – will not move to change interest rates.  But we see a rather intriguing possibility now peeking out of our charts – namely they could.

First, it’s axiomatic (around here, anyway) that the Fed gets a pass on “being political” because there is such a lag-time between when a rate change is announced and when its results become apparent at the consumer/street level.

Supply-chains are long…so it’s not just money that drives future price changes.  It’s also the “length of the production pipeline” for simple raw materials, and the length of the follow-on distribution pipeline.  That’s why a change in oil prices can take up to 50-65-months to fully propagate around the economy.

A surprise Fed hike would signal an anti-Trump 2020 move to us.

The biggest impacts come first, of course.  Diesel goes up, food goes up the next crop-cycle later.  But, the costs of frozen food (where diesel might fire the generators that run the freezing gear) might take a couple of years because utilities lock in prices will in-advance.  Could a hike now impact by November?

That’s why we’re looking with more suspicion than usual at this Fed meeting.

Our internal trading model reduces to a simple pair of lines.  When the Red line is above the Blue line, we are “cleared to short.”  With a mile-long string of asterisks which is why this is not trading advice.

Otherwise, when the Blue line is over the Red then it’s OK to jump in on the long side.  But again, with a zillion terms and conditions that include (just to name a few) the Elliott wave count, the monthly slow stochastics, and so on.  On-balance volume, momentum?  Sure, toss ’em in the mix, too.  Blend well and bring rosary beads.

Here’s the problem we see in the red-blue battle today

(Modeled-forward based on today’s futures prices and explaining the light-yellow candlestick-thingy was a range I was looking at yesterday when short was center-stage…)

This isn’t one market.  It’s a composite of several US indices.  These – equally dollar-weighted – do a better job of revealing underlying market sentiment than single markets which may be more easily manipulated both by commercials and circumstances.

Take this past three days:  The S&P has remained somewhat rational, the Dow has been all over, and the Techs have fallen based on the FB problems and so forth.  Apple and several others will announce earnings today, too…so tech action could move accordingly…

You probably don’t want to get down into this level of detail when trading  based on differentials between different-sized oscillator samples.  If you were, you’d be a Peoplenomics subscriber where we’ll get into more detailed discussion tomorrow.

The abbreviated version here is that our daily data broke to a new all-time high last Thursday.  So, we are naturally inclined to believe that a blow-off into the third week of August is the most likely (Elliott) outcome.  Still, we nevertheless get nervous when the Fed is meeting and when democrats (the party of the rich/establishment) are looking to “cap” Trump’s run which has been putting points on the board like crazy, lately.

That’s why we felt compelled to talk about the chance of this “Deep State Surprise” potential.  The market is overpriced, sure, no question.  BUT that doesn’t mean we can’t move higher-still since the market senses how things will be six-months to a year out.  And for now, while that seems pretty good, we expect Housing as already begun a slow roll-over and in the process, will spell the short-term end of the Trump Bump.

See the Futures?  Lumber was sucking-wind and that is one reason to think Housing data forward from here might be “iffy” and we noticed (very much worth mentioning!) that Lumber is down another 4.14 percent in the early futures trading again today.  Who do these lumber traders think they are?  Facebook, Twitter, or something?

We’ll post the Case-Shiller (S&P, CoreLogic and whoever) data around 8:15 to 8:20 AM Central.  Maybe earlier, but unlike politicians, we like to under-promise and over-deliver.

Homebuying, meantime, continues to become a shorter, smoother process for those stepping up: “Shift to Accommodate Millennial Home Buying Preferences Reduces Loan Application Defect Risk, According to First American’s Loan Application Defect  Study…

On To Other Data

These aren’t as “hot” as Housing will be (or cold based on futures pricing), but important nevertheless:

Labor Department Employment Cost Index is just out.

“Compensation costs for civilian workers increased 0.6 percent, seasonally adjusted, for the 3-month period ending in June 2018, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.5 percent and benefit costs (which make up the remaining 30 percent of compensation) increased 0.9 percent.

Compensation costs for private industry workers increased 2.9 percent over the year, a larger increase than the 2.4 percent increase in June 2017. Wages and salaries increased 2.9 percent for the 12-month period ending in June 2018 and increased 2.4 percent in June 2017. The cost of benefits rose 2.8 percent for the 12-month period ending in June 2018 and increased 2.2 percent in June 2017. “

And for Bureaucrats?

“Compensation costs for state and local government workers increased 2.3 percent for the 12-month
period ending in June 2018.”

Under Trump, we observe, the workers – not the bureaucrats  – are coming out on top this month.  No, that’s not pro Trump, that’s data.  Try to differentiate.

Speaking of Trump… the…

Manafort Circus Opens

The highlight – center ring – will be how Paul Manafort didn’t register as a foreign agent when he worked some Ukraine business long-before “stumping and Trumping.”  The “collusionists” will try to muddle this and toss in the word Russia as often as they can to keep selling the big lie.  If you hear the word Russia in coverage, don’t trust that media source unless it’s a charge in Manafort trial…

If you are a Trump-hater, see Time‘s coverage about this in “Here’s What You Need to Know.”

So far, we’re not impressed with much of anything Mueller has done and the media’s just hawking prognostications from Impeachers and Haters to bump up ad revenue.  If you proud have “Sucker” branded on your forehead, these are “thrilling” times.

Despite the Jeer-leading media, Trump is still very much “on game” as “Threats aside, Trump says he’s willing to meet with Iranians.”

Yet here comes the exposé: Woodward to release Trump book before midterms.

Several of our readers wonder if the Hildebeast would have reduced taxes, grown the economy, made a serious run at working out the NorK-mess, and let’s not forget fixing lopsided billionaire embellishing trade deals and a huge middle class tax cut.  Seriously?  HER?

The Victimology Files

A Gay Couple Says They Were Asked to Fly Separately So a Straight Couple Could Sit Together.

Viral Video of a Man Slapping a Woman in Public Sparked Outrage Across France.

Melinda Messenger: ‘How do breasts have so much power?’  (Because most men are idiots, m’ dear. D’uh.)

And then we have More misbehaving American executives get the boot.  And yet, the Economist admits Open offices can lead to closed minds.  Hmmm…

Yes sir, Victimology is the new growth industry!  Be a victim today!  Sue, defame, blame!  It’s how to polish your Platform and micro-monetize it!  Yee-haw!

Complimentary democrat party memberships included!  Member FDIC. model number 23490874er90467, see details at dealership, void where prohibited, does not include $750 doc fee, and dealer prep and state and local taxes.)

Fuzzy-speak at Foggy-bottom

Say, here’s a fine pissing away of Ure tax money – from the State Department:  Press Releases: Remarks on “America’s Indo-Pacific Economic Vision”

“Dear Secretary Pompeo:  Pah-leeze!  Figure a way to cut State’s workforce in half and their influence by a third.  Then get up and talk about America being open for business.

But this kind of fluff?  Sheesh!  Good God, man.

(Don’t mind me.  I live in a delusional world where a good CEO-type walks in, gives a 3-paragraph speech:  (Our problem is… Our options are…My decision is…  Now get out and freaking implement!)

In Ure’s world, politicians who don’t know what the ‘f’  they’re doing hide their ineptitude in a sea of useless words rather than getting-on with rewriting the future.  Socks on a goose, as a friend says.

Direct speaking reflects clear thinking while cutting workforce requirements dramatically and, oh yes, saving tax money.

I counted 3,599 words in this State press release while finding nothing of news value to it.  Political facetime exercise for the snooze channels.  This should explain on thing:  the recent spike in Anderson County Texas vodka sales. People actually read this drivel.)

Moron the ‘morrow…”  (after the housing data)

21 thoughts on “Could the Fed Pull a Deep State Surprise?”

  1. I tend to think (being barely awake, sorry) that the Fed will NOT raise rates as the economy is so unpredictable due to the tariff situation. To be sure, the economy was improving . . . but putting extra stress on international trade will make ‘crystal balls’ cloudy.

    • Powell said one 25bps rate increase each quarter there is nothing that has happened that would appear to reverse that course – plus he doesn’t have enough clearance to lower after a downturn in the economy and won’t do so until it’s apparent ……. I for one would be shocked if he doesn’t move again …..

    • M.D.. I wonder.. can they raise the rates.. I think the image of an improving economy is just a slight of hand show..I knew a mechanic at a car dealership he would tell me that they would have him greasing the wheels.. while the axle is wearing out. or dumping liquid axle grease in a motor to make a car sound like it was running smoother..
      I have the impression that this is exactly what the fed reserve is doing.
      what makes it worrisome is that they are basically kiting the economy.
      it all looks good.. the clincher is.. wages..a nickle increase in fuel costs an employer won’t increase a laborers wage by a penny.. the reverse pyramid.. I use to call it a spiral.. The only way I can see that it can be stopped is.. TARIF incoming goods and services.. charge companies that hire people from other countries to do services.. have you talked to someone in america lately when calling customer service? except on countries that even up sales. they buy we sell but they buy as much or more than we sell them.. then the border.. the wall won’t work it is an iconic image at best.. want to stop it..
      then anyone that passes a back ground check and wants to work in the usa raise a family. welcome.. but you don’t get any of the services that american laborers work so hard for. then they have to pay all taxes that american citizens have to pay without access to any of the benefits until they become an american citizen along with a non resident tax.. think about it during my lifetime if I had just invested what I paid in social security in savings bonds I would have acquired a savings of between fifty to a hundred million dollars the employers that are hiring illegals if they are investing that same money the same way well you see why an illegal immigrant is so attractive as an employee. employers welcome the illegals because they can pay less and no taxes.. then for any employer hiring an illegal.. fine the heck out of the company along with the CEO and any of the administration staff.. the first time the second time then shut the doors or the companies assets are seized along with the CEO and any Board Members allowing for that to happen.Do the same thing with housing..someone slave trading .. well then they should be sent to a prison in some other country that will treat them they way they should be treated..
      by eliminating the jobs and tariff incoming goods and services.. taxing anyone hiding money outside the might be survivable. Unfortunately I think we are beyond that. now just to ride it out..

      • LOOB; it didn’t start with the employers, it started with Agenda 21, the elites, the NWO folks and it bit like a mad dog when NAFTA got passed, and it hasn’t hardly slowed a bit; for 25 years solid. Once our government sold us out, government provided services, laws passed to support illegals, refugees, their families, the school system, free lunches, money, healthcare, jobs, ignored and didn’t enforce our laws, etc., it was easy for the Corporations to follow suit, banks, construction companies, homes, and infrastructure, and one domino fell after another, slaughter houses, chicken farms, colleges, agricultural (remember the buy up of the family farms to corporation farms) outsourcing the call centers, inhiring the spanish speaking illegals to support the 60 million plus that were and are here (plus millions more). It has been a concerted step by step takeover of the country. You will tell when it is done, when they have collapsed the society, they will call us a color revolution, and you will see their handiwork just like the color revolutions all over the ME (they were all UN/EU/USA/Israel/UK driven), none of them were grassroots. I think we are reliving when the first Black slaves were brought to America. The majority of White southeners did not want slave labor, but the elite shipped em in on their trade ships, and here we are, 100 years from now, the history books will say that the White majority USA wanted all the illegals to come into the country to work like slaves. When the truth is, the majority of the country was lied to for 25 years (longer if you go back to Reagan) and an underground network of greed and deception threw our borders wide open and flooded the country with illegals, while keeping this flood from the citizens as they thought our ‘laws’ would be upheld. “People perish from a lack of knowledge.”

      • Slaves..I totally agree with your assessment.. Slaves today are the blue collar workers. Page by page Adolph’s second secret book. History repeating itself from the stories of every major civilizations rise and fall.

    • Just watch. The trade war is just a tactic Trump is and has used to get our trading partners to the table and hopefully get us a better deal. Got discussions going with EU and now XI wants to talk.

      • Right on joe. You hit the nail on the head there. DJT is a businessman not a legislator taking huge sums of donations to support legislation written by the organizations donating those huge sums of money and most importantly not read by them. In fact they absolutely refuse to read them before they vote on them.

  2. The whole thing is a scam and I’m sure you know it as well as anyone with a half a brain,the so called Trump bump was little more than a ton of money thrown into the system as a cover for the free pass he gave the business sector on the tax deal,meanwhile inflation has/is eating up any rise in income. Where we buy our building supplies they had a sign up in April, steel price will increase 15% on April 15th,the first part of May they had another sign up all prices will increase 15% on the 15th and other things have increased the same some more some less.
    They learned a few things from Nam, if the MIC wants wars the draft don’t work, nor honest reporting,so they simply bought the media off, so they went to a mercenary army and no one cares if they get killed off.As far as Trump no one knows what he’s going to do for Trump dosen’t know what Trumps going to do, for he makes statements today and then eats them for lunch the following day as he back tracks on most issues,lol just the way it is regardless of which political ideas you subscribe to, a two party system joined at the hip speaking out of both sides of it mouth to see who is liar of the month…

    • The Trump Tariff relief for domestic victims of the tariffs is another tell that a scam is being run. Free money.

    • “Trump dosen’t know what Trumps going to do, for he makes statements today and then eats them for lunch the following day”

      The same thing happens to me as well.. Someine will aske me something and I’ll give my honest off the cuff opinion .. After I have had a chance to digest it and after I’ve looked at it from different perspectives a different answer to the situation.
      Its actually one thing I adore about DJT.. He’s giving everyone his honest opinion from his perspective at that moment..a very refreshing and welcomed change from the normal scripted DC two step..

  3. George
    People are not idiots. Breast implants make a woman’s waist appear narrower. Breast Implants are just the latest trick to make women appear thinner.

    A few years ago the actress who stared in the movie Cinderella was criticized on social media for excessive weight loss. The cyber bullying was so bad the dress maker had to explain that the cut of the dress and the hoops in the skirt made Cinderella appear thirty pounds lighter than she actually was.

    I would also suggest watching Nicole Kidman’s performance in Moulin Rouge. In that movie she wore an authentic 19th century corset. An horrible garment that I would discourage any woman from wearing. Although she probably wore it to look authentic as a movie fan I would have discouraged Nicole Kidman from wearing it, but for one thing: She never looked so good.

    To summarize women have been using a variety of approaches to look thinner for a long time.

    • Perhaps breast implants cause illusory slenderness at a distance, but the only real way to look thin is to be thin. If a girl has less than an A cup, implants may help her self image and that of her suitors. If a girl has a B or larger cup, implants are really a turnoff(to me). Long hair, A-line dress, genuine slenderness, fitness and sexy body movement will do far more for me than implants, especially since implants many times will look fake.

  4. “Blend well and bring rosary beads.” Ain’t that the truth? ;-) When I was a junior I’ve read A.S.’s ‘Wealth of Nations’ and I was impressed. Since then I’ve been asking myself what went wrong?

  5. “Surprise” the view from the bottom predicts a brown hailstorm..

    Wow..speaking of surprise.. Fighting huge cuts in take home cash spending to pay for health insurance..
    Got a bill the middle of June.. The office said to wait until the bills were processed by forward..doing bills opened the bills to be processed. In the original says 30 days..
    Their business office doubled it..
    Wow…guess i’ll have to sort it out tomorrow..

  6. Smoot hawley didn’t work then and won’t work now. Trumps tariffs are nothing more than taxes to make up for some of the largest deficit
    In history. Call it by any other name but it’s an income producing tax
    Nothing less nothing more. The funny stuff is about to hit the fan along
    Come Halloween

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