people should read before they post "the fed does not raise rates in Dec". (which is a gross generality on my part actually the number is 2.13% in the past 40 years).
People should research before they post.
Federal Reserve Board rate changes in DEC (since 1972):
2008, 2007, 2005, 2004, 2001, 1995, 1991 (two separate times), 1990, 1989, 1988, 1986, 1985, 1984 (two separate times), 1982, 1981, 1980 (two separate times), 1979, 1978, 1976, 1974 (two separate times), 1972
That is 25 changes in December. How many were increases versus decreases is irrelevant__the importance is the FED is ‘not’ immune from DEC changes.
The most consistent trend from mid NOV thru FEB are adjustments to reserves; and ‘Central Bank’ and IMF purchase/sale of currencies’. These entities adjust their balance sheet(s) for their ‘fiscal year’ closings. This consistent seasonality creates increased volatility providing an opportunity using FOREX spreads to capture coin. The seasonality is more opportune than the grain trade at harvest season(s).
I think the Fed has painted themselves into a corner that requires them to raise rates. I think they need a strong stock market, and a 2015 increase is required for that.
I brought this post back because there were pretty obvious reasons for what the Fed was going to do and there are pretty obvious reasons for what it will do. 1. There is no press conference after the Oct meeting so the odds of a raise in Oct are 0.00%, the fed does not raise rates in Dec so 0.00% for a Dec raise. 2016 is an election and all of the Feds Board of Governors were appointed by Obama (plus 2 in the wings). There is absolutely no chance whatsoever that the Fed will raise rates in an election year given these facts. As I've said repeatedly, QE4 (negative rates, balance sheet expansion etc will begin sometime in 2016)- (by the way, QE1 started in Dec 2008. Guess where the 10yr was? 2.14%, pretty much exactly where it is today) the US economy will not respond to this foolishness, just as it hasn't responded so far. So where will the money go, that's the $6,400,000,000,000 question.
At this point I own 0 stocks and am long SPXU. I own long duration, very low credit risk or 0 credit risk bonds. I own no real estate. I'm looking around for defensive stock plays or something to be long vs my S&P short but I haven't come up with anything yet, I'll post if I do.
"After 9 straight years of zero, don't you think the probability of higher rates is greater than lower rates."
I believe you have been predicting higher rates for quite a long time dr_kumps. It is almost the end of September 2015 the 2yr at .68%, 10yr at 2.13%. We now have a global slowdown, deflationary pressures persist, and you are still predicting higher rates.....
You have to be the dumbest person on the planet!
"toward future continuing lower prices"
I will repeat this:
That is exactly the opposite of forwardation (contango). It is when a future price of the underlying commodity/financial instrument would be more than the expected spot (or immediate delivery) price.
Why don't try spending your time reading financial books; instead of wasting searching the internet for terms like convexity or contango and then posting about things you clearly do not understand! What you are describing is called “BACKWARDATION”
I almost called up my old buddy Dudley from my Goldman days but I wasn't sure what I'd say to him. The idea that 80 months of ZIRP haven't quite done the trick but maybe maybe 81months or 83 months will have the patient up and dancing the congo strains even Keynesian credulity. At any rate I'll handicap an Oct raise (0.00%) and a Dec raise (0.00%) and a qtr 1 QE4 (50%). To do anything else would be to admit that the past 80 months and a $4.4 trillion dollar Fed balance sheet have been a complete waste of time. It, of course, hasn't been a complete waste, Goldman is making $11Billion a year or so, commercial real estate in NYC is going for $1000/foot and properties in the Hamptons have surpassed their all time highs. I'm not sure how that's helped the real economy but hey if ya can't help out your friends, what good are you? As I mentioned in a post last week, there would be a short rally (although I thought it would last more than 5 minutes) following the feds Blazing Saddle release of "we don't need no stinking fed funds raise" and that whatever you hadn't sold --- SELL (unless of course it's duration--keep tha!!)
What we saw was the cost of transparency. How does it help investors to have information on the thinking of an organization that has the collective wisdom of a group of geese?