Rate Hike Odds Dive: Any Rate Hikes in 2019? Sucker Rally? Musical Tribute!

Stocks recovered from a huge move lower after a speculative WSJ report on a new data-dependent Fed. Any hikes coming?

The Wall Street Journal reports Fed Weighs Wait-and-See Approach on Future Rate Increases.

Federal Reserve officials are considering whether to signal a new wait-and-see approach after a likely interest-rate increase at their meeting in December, which could slow down the pace of rate increases next year.

Sucker Rally

The Dow industrials tumbled were down over 700 points before sharply rallying in the final hour to close down about 79 points.

Assuming one can attribute a stock market move to silliness as opposed to randomness, that WSJ report fits the bill.

Technically speaking, stocks bounced off strong support.

Dow Support Levels Daily Chart

There are support levels every couple thousand points below but this is the major one.

Dow Support Levels Weekly Chart

I highly doubt this rally holds. Each time a level is tested, conviction and buyers give away. Quintuple bottom? Really?

December 2019 Rate Hike Odds

Note that the above chart displays rate hike odds for a year from now, not the December 19, 2018 meeting coming up. I am assuming a hike on December 19.

Will the Fed Hike in 2019?

Maybe Baby

Recession Coming

Full inversion? Maybe baby, but I doubt it. A recession is on the way.

If the Fed does not hike in 2019, I doubt the 3-month to 30-year yield curve inversion that people seem to expect will occur.

The Fed is Slowly Hiking Into a Recession and we are nearly there.

Mike "Mish" Shedlock

Comments (19)
No. 1-12
lol
lol

What a shocker,central banks massively buyin the dip(for the millionth time),one way or anothercentral banks will eventually be the largest owners of stocks,bonds,gold,silver,oil,copper…...everything!

themonosynaptic
themonosynaptic

So, what sort of recession. I'm willing to buy that there will be another recession in the future (but I've no idea when).

I predict a minor asset bubble bursting that causes a malaise and drags the economy down - in other words, a consumer confidence recession triggered by a drop in e.g. property prices by say 15%. 15% would not be enough to trigger a confidence recession most times, but the social landscape is fractured and conspiracy laden (just read this blog and many of the comments).

So my best guess is a minor crisis, followed by a drop in consumer confidence as people exhaust bleeding money out of their houses via HELOCs and so start tightening their belts, leading to a retail slowdown and a Wall St panic, and the story writes itself thereafter.

Basically the economy is a massively complex machine that is also continually changing, with the most important actor being an average intelligence ape randomly trying to be happy.

Blacklisted
Blacklisted

IT'S NOT THE ECONOMY/DATA DRIVING THE FED DECISION. It's the rock (dollar-based debts abroad), and the very hard place (unfunded pensions) that has the Fed in a circle jerk. They will come down in favor of civil unrest abroad instead of civil unrest in their back yards.

jivefive99
jivefive99

Im a Rickards fanatic and he has said for awhile the Fed will hike to 3-4% because that is the rate cut you need (3-4%) to go back down to 0% to fight a recession. Jim Rickards certainly isnt right about everything, but his read is that the rate hikes continue in 2019. Powell has a 10 year term anyway, no? Who cares what Trump is saying about him. Stock markets DO go down sometimes.

KidHorn
KidHorn

The FED will continue to hike until it's too late and then they'll slash for far longer than necessary. Because, when have they not done that?

Pater_Tenebrarum
Pater_Tenebrarum

This support level is clearly a price attractor begging to get smoked - I expect it to happen fairly soon.

thimk
thimk

we still have a way to go until the "trump bump" is eroded .

Casual_Observer
Casual_Observer

What bounce ? All major indices are now giving back 2017 gains.

Casual_Observer
Casual_Observer

FWIW the growth story was always a farce because most of it was due to inventory overhang and one time tax cuts. Why have corporate profits declined and markets declined ? We are back stall speed now. If you count up the long term unemployed and include them in all economic stats we surely never came out of the last recession.

Realist
Realist

Ten years of economic growth is a farce? Eventually there will be a recession. Then you will calling this time period “the good old days”.

sunny129
sunny129

The Stocks remain overvalued. Bull is tired and long on tooth. Earnings warnings are popping up daily. Massive DEBT overhang of all different kind, increased to record level since '09! Don't forget trade wars intensifying!

Where is that HOPIUM sunshine' data coming to rescue us from the looming recession? Are we trapped in collective cognitive resonance zone?

sunny129
sunny129

Spot on!