Fed To Remain On Dot Path… Or So They Think!

September 27, 2018 

* Currencies back off on Fed rate hike

* RBNZ leaves OCR unchanged… 

Good Day… And a Tub Thumpin’ Thursday to you! Well, my memo to my beloved Cardinals… Pack up the bats boys, it’s all over but the crying… I did something different for me last night… I came home to hear Alex playing his guitar, and for some reason, I decided to join him. Picked up my guitar for the first time in a couple of years, and played a little bit… This will be short-n-sweet today folks, I promise! The Rolling Stones greet me this morning with their song: Dead Flowers… 

Well there were no surprises at the Fed’s FOMC Meeting yesterday, the Fed heads raised the Fed Funds Rate 25 Basis Points (1/4%) bringing the rate to 2.25%. Fed Chairman, Jerome Powell, didn’t make any dovish comments, and instead talked about the Fed remaining on the dot path, or so they think!, which would mean another rate hike in December, and then more next year.  It was as rehearsed a press conference as there could be, and it all looked very sterile and robotic…  I just don’t see how they are going to be able to connect all the dots next year… 

The currencies, led by the Big Dog, euro, lost a little ground, but nothing to get to panicked about, the euro, for instance, is still trading above 1.17, with most of the euro’s downward move from 1.1765 yesterday is the reporting of a major problem with Italy’s budget… There go those crazy third cousins causing problems again! 

The Reserve Bank of New Zealand  (RBNZ) left their Official Cash Rate (OCR) unchanged at their meeting last night… The OCR remains at 1.75%, and inflation at 1.50%… So, at least they don’t have real negative rates, like we have here in the U.S. but… 1.75% for the tiny island nation, isn’t going to get anyone too excited to buy the currency… UGH!   

The RBNZ said in their communique that as long as inflation remained below 2%, the OCR would remain unchanged through next year… Wait! They said what? Yeah, they said that…  I shake my head in disgust with myself for thinking that the RBNZ was ready to hike rates… The June GDP was better than expected, and the trend there is good… But apparently not good enough for the RBNZ… 🙁

Gold lost $6.70 in trading yesterday, and the price of Oil bumped higher by 10-cents… President Trump was at the UN yesterday, and by all accounts he ticked off quite a few people, refused a meeting with Canadian PM Trudeau, and then had to hear from the Ford CEO who claims that the steel tariffs have caused Ford to lose $1 Billion so far… 

We finally get some real economic data from the U.S. Data Cupboard today in the form of Durable and Capital Goods Orders… These two data pieces can be very volatile, but give a good picture of what went on in the month they are reporting from… The recent prints have been negative… But there’s a good chance that the August print will be a positive one… 

To recap… The Fed did hike rates yesterday, and stated that they remain on their dot path, which would mean another rate hike in December  and then more next year… The currencies backed off a bit, but most of the euro’s downward move came from a problem being reported with the budget in Italy.  And the RBNZ left rates unchanged and said that they would remain unchanged through 2019… Chuck is beside himself on this one folks… 

For What It’s Worth… I struggled with this one this morning folks… but finally decided that it was FWIW worthy… It’s about how the IRS continues to target conservatives, and can be found here: https://www.zerohedge.com/news/2018-09-25/i-dont-give-shit-if-its-crime-fourth-veritas-video-reveals-irs-still-targeting

Or, here’s the snippet: “James O’Keefe just dropped the fourth installment in his series exposing the corruption and bias in the ‘deep state’. This report features two Internal Revenue Service (IRS) officials who candidly discuss the IRS’s unfair treatment of conservative non-profit groups.

In a separate meeting, attorney Semasek discloses to Project Veritas multiple times that “mistakes were made,” during the 2013 scandal when conservative non-profits were targeted when applying for tax-exempt status.
SEMASEK: “… you know what, for what it’s worth, on the record, I know people in Tax Exempt Government Entities. All that stuff we saw in the news, yeah mistakes were made”
Attorney Semasek, who worked for the IRS during the 2013 scandal, continued:
SEMASEK: “… The law requires that an organization can’t be political, it can’t be partisan to be tax exempt… Those employees in Cincinnati Ohio started to separate them and put them in a pile. And it turns out that they were like the Tea Party group of people. And I think they did, like Lois Lerner and maybe some of her employees were more liberal leaning or Democrats so I don’t know if they disallowed them, but they required them to produce more documentation to try to prove that they weren’t partisan.”

He repeated that mistakes were made:
SEMASEK: “… and that was bad. I think, from what people tell me, that really know about, there were mistakes made, but the problem with what happened… And again, there were mistakes made, and I think probably some people that were advised against conservative groups did make some mistakes.”

Chuck Again…  I guess I had better be careful calling out the IRS, eh? 

Currencies today 9/27/18… American Style: A$ .7228, kiwi .6642, C$ .7657, euro 1.1710, sterling 1.3128, Swiss $1.0296, European Style: rand 14.1025, krone 8.1222, SEK 8.8243, forint 276.40, zloty 3.6515, koruna 21.9616, RUB 65.83, yen 112.82, sing 1.3648, HKD 7.8155, INR 72.46, China 6.8731, peso 18.91, BRL 4.0580, Dollar Index 94.50, Oil $72.22, 10-year 23.05%, Silver $14.41, Platinum $826.21, Palladium $1,082.00, and Gold… $1,193.91

That’s it for today… Strange day yesterday, the Fed hikes rates, and the 10-year Treasury’s yield drops 3 Basis Points… I know, short term rates VS 10-year rates, but still I would have thought it would move differently… I’m just saying… Tried out a new place in town last night, but I doubt seriously it would replace my usual Friday night place! Emerson Lake and Palmer (ELP) take us to the finish line today with their song: Still You Turn Me On… And with that, it’s time to go… I sure hope you can make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!

Chuck Butler