BREAKING: Wall Street Consenseless Has No Clue About Fed Rate Hike

Takeaway: We don’t put much stock in Old Wall’s Fed predictions.

BREAKING: Wall Street Consenseless Has No Clue About Fed Rate Hike - consenseless  2

More data. More bad news for Fed-hike prognosticators.

Today, U.S. industrial production year-over-year slowed again to the lowest reading of 2015. Here’s analysis and a chart from Hedgeye CEO Keith McCullough:

“With Industrial Production only 0.3% y/y now (lowest reading of 2015 - see red circles) we’re entering the next leg down of the cycle = Industrial/Cyclical Recession. Don’t forget that growth is reported y/y and the toughest compares were in NOV/DEC of 2014 (see green circle). Things should slow faster in the coming months.”

click image to enlarge.

BREAKING: Wall Street Consenseless Has No Clue About Fed Rate Hike - industrial production

That’s just the latest underwhelming economic reading. Don't forget New York Fed president Bill Dudley's recent concern that inflation is running “well below our 2 percent objective.”

Below are a few more recent economic misses (for those of you keeping score):

BREAKING: Wall Street Consenseless Has No Clue About Fed Rate Hike - miss

So a December rate hike isn’t necessarily such a sure thing. The Fed is 'data dependent.' Remember?

BREAKING: Wall Street Consenseless Has No Clue About Fed Rate Hike - wsj econ survey

And yet, the latest headscratcher from Old Wall is the overwhelming expectation of a December rate hike. If you think their predictive track record matters, think again. Here’s a Wall Street Journal survey of economists:

“There is near-unanimous agreement among private forecasters surveyed that the Federal Reserve will begin raising short-term interest rates next month after holding them near zero for seven years.

 

About 92% of the business and academic economists polled by The Wall Street Journal in recent days said they expected the Fed to raise its benchmark federal-funds rate at its Dec. 15-16 policy meeting…

 

In the latest survey, the economists on average estimated the probability of a rate increase next month at 71%, up from 48% a month earlier.”

Right...

Now take a second to look at how “well” these same folks have done forecasting the next Fed rate hike. Below is a recap also from WSJ. (Notice the overwhelming consensus, in July and August, that the Fed would hike in September):

BREAKING: Wall Street Consenseless Has No Clue About Fed Rate Hike - econ consensus

No, we don’t put much stock in Old Wall’s predictions.

BREAKING: Wall Street Consenseless Has No Clue About Fed Rate Hike - ex economy