Markets Ignore Fed’s Bullard One And Done Admission – Ep. 205

* The odds of a December rate hike continue to ratchet up above 70% * We had a parade of Fed officials, most recently again today coming out and talking about why a December rate hike is a good idea, probable, possible, appropriate * You name the adjective, some Federal Reserve president, governor is discussing it * The markets are ratcheting up their expecations * The dollar index continues to move higher, we hit about a 9-month high today * We got above 99; but we didn't close there, in fact the dollar index managed to close down a notch * Interestingly enough, gold had a pretty strong day today, we had about I think we're at $12.73 * Even to the extent the FOREX traders are worried about a December rate hike, the gold traders don't seem to care about how a rate hike might impact the price of gold * This says either the gold traders don't believe that a December rate hike is coming, or they've correctly concluded that even if the Fed does raise interest rates in December, it's no big deal * It's too little too late to be a negative for the gold market * The Fed is going to deliver far less than it promised when it comes to rate hikes * In fact the most interesting comment from a Fed official came last week from St. Louis Fed President James Bullard * He said that the Federal Reserve only needs to nudge interest rates up by 25 basis points * Right now, the official rate of Fed funds is between .25 and .50 * It used to be between 0 and 25 * I think where we actually are right now is 38 basis points * So if we moved up 25, at least these are the numbers Bullard is throwing out, we'd move up to 63 basis points for the Fed Funds Rate * Which is just barely above a half point * He says that's all we need to do is nudge it up to 63 basis points, and that's it - we're done * He said, "We need to do it in December, but then that's it, interest rates are going to stay really low for years." * He's talking 2 or 3 years or maybe even more of ultra low interest rates, despite whatever is happening in employment, and inflation * This is all we need * Nudging up by a quarter basis point and we're done * I was surprised, to be honest, that we didn't get more of a reaction to this admission by Bullard that the next hike, if it comes in December is the end of it * If that's it and then we're on hold for years * Sometime, during that period of time, we're going to find ourselves back in recession * Even if we're not in recession now * Even if this so-called recovery is in its twilight * Remember this is the 3rd longest recovery of the post-war era and it is the weakest recovery - ever * And, of course, it has the most stimulus * So despite having the most stimulus, it's the weakest * Clearly, it's going to run out of steam * So if the Fed does in fact raise rates ever so slightly in December and then say: * "That's it for now, we're just going to wait" * What's going to happen is, we'll be back in recession * If Hillary Clinton becomes the next president, and it's looking more and more likely that that nightmare will become a reality * If she is, she will try to stimulate the economy * Look what happened with George Bush * When George Bush was initially elected the first time, he inherited the bursting of the dot com bubble Our Sponsors: * Check out FRE and use my code LISTEN20 for a great deal: https://frepouch.com * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy