from Jesse’s Café Américain:
The Fed not only blinked today. They were twitching like someone afflicted with Tourette’s syndrome. The reasons are pretty clear.
The Fed had to take out the word “patient” today, or lose all credibility, and risk scaring the markets back into reality.
As I pointed out earlier today, in the assessment of an agency in the Treasury, the markets are at a two sigma level of potential volatility, ie like ‘quicksilver.’ And of course, as is apparent to anyone who actually reads anything with a critical eye, the real economy is wallowing all over the place. Finally, the recent moves by most of the rest of the world’s central Banks have been to fully engage in the currency war by cheapening their currencies. The Fed would have looked like flaming idiots if they had raised rates today, given all the weak economic factors, the exceptionally low interest rates because of inbound capital flows from abroad in search of yield and safety, and the subsequent undue strength of the dollar that was already stifling exports and manufacturing.
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