Post Crimea, FOMC Up Next

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The HUI Gold Bugs index got Ukrained to the extent that global crisis hype seeped into this market leading into the weekend. The S&P 500 got Ukrained the other way as people actually acted as if the Crimea question is a macro fundamental.


I think after today the books are square on Ukraine but not yet the FOMC meeting, which will provide another hype opportunity. Will they or won’t they ruminate about an eventual hike to the anti-Grandma Fed Funds rate, AKA ZIRP?

At least the cacophonous mess we call the financial media is starting to look in the right direction after obsessing about QE tapering for way too long. QE tapering comes as a positive, not a negative.

Rate hike language, if it comes would probably start the clock ticking on the next liquidation out there somewhere on the horizon. But here people might recall how long markets can go in the face of actual (as opposed to taper’s pretend) policy tightening.


After all the last two great S&P 500 humps went hand in hand with the Fed tightening policy as the IRX (3 mo. T Bill yield, black line) was either elevated to begin with (Hump 1) or duly followed the bull market upward as it should (Hump 2). Today’s great Hump 3 has been attended by a T Bill yield pinned to the floor (via ZIRP, initiated Dec. 2008) and these creeps have not yet even thought of releasing it and giving Grandma a break.

You really don’t need much more than a picture like this to see that there really is something wrong here. Any damned bull who cherry picks only what he wants to see does not care to ask why with a firm economic recovery, super bullish markets and now even business lending coming back on line they do not start immediately on raising the Fed Funds rate… like on Wednesday.

Of course, they probably won’t. They probably won’t even make the bold step of even introducing it into the official bullshit they release in the statement. But just ponder that SPX / IRX chart for a while and realize that if things are indeed symmetrical and at all normal, we are long past the time when the Fed Funds should have been raised.