Wondering about a December Fed rate hike? The latest news comes from San Francisco Fed president John Williams who told USA Today in an interview Tuesday that there is a “very strong case” for a rate hike this year “assuming the data are consistent with those [conditions].” That's an important caveat.
Once again, it’s the pesky data that could screw everything up for rate-hike prognosticators. And the parlor game goes on...
In good faith and as part of our daily process here at Hedgeye, yesterday, CEO Keith McCullough went hunting for so-called economic “green shoots,” those bright spots in the daily data that might support a perma-bull equity thesis. In short, he couldn’t find much. But he did see a number of red flags.
To be clear, we remain very concerned that the Fed will, in fact, be hiking interest rates into an economic slowdown.
Earlier today, McCullough isolated one key data point flashing green, but it’s actually another notch in favor of the bears.
Here’s a chart of the strengthening dollar:
... And McCullough’s analysis in a note to subscribers earlier this morning:
“Relentless USD strength as my Berkeley boy Williams (San Fran Fed) hits USA Today with the ‘recent data supports a rate hike’ – I guess he missed all the industrial/cyclical, ISM, and GDP data, but raising rates into #LateCycle slow-down is mucho deflationary for many asset prices – DEC 4th US Jobs Report up next.”
On the USA Today Williams interview news, commodities, like Copper, continued #Crashing.
Check out Oil prices too…
If you're concerned about #Deflation, like we are, it's all a bit disconcerting.
But never mind all that, says Fed president Williams. More *deep* analysis from Williams:
"I don't see much evidence of fragility or lack of momentum…At some point, just the improvement in the economy with the passage of time starts to outweigh some of the concerns of potential risk."
Stop right there. On Williams' point about “the passage of time,” remember that the current U.S. economic expansion has stretched 78 months. Our analysis of a century of economic cycles shows that the mean duration is 59 months. So with all due respect Mr. Williams, the current expansion is getting long in the tooth.
But go ahead raise rates into the slowdown. We'll see what happens...