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Nomura’s McElligott: Fed Now ‘De Facto’ Easing, CTA Model To Flip ‘100% Max Long’ On Nasdaq
Hours before Wednesday's Fed decision and Powell presser, Nomura's Charlie McElligott noted that "some believe it will be difficult for the Fed to not sound somewhat ‘hawkish’ relatively speaking and disappoint ‘doved-up’ market expectations."
A few bullet points later, though, he flagged what he said was "VERY provocative, 11th hour talk through ‘consultant / macro advisory’ circles that the Fed could in fact state today that at a future meeting, they will lay out an actual time
the interpretation is that there will no more rate hikes. isnt the usual method of indicating future hikes is the dot plot ? which we did not have this time. the lack of the statement to raise means they will do something different for the next 12 months than they indicated one month ago??
it still looks like: fed may or may not raise in 2019, but will ocntinue to let bonds rolloff until it decides not to. mkt seems to be well ahead of itself and is acting like the fed NOW (changing from its past 30 years) to comletely change guidance/policy completely at any given meeting.
when does the fed start walking back ‘no rate hikes in 2019’ ?
the rally off xmas eve has been running on the expectation the fed will get dovish….econ info is weak, continues to weaken, etc, globally. that did not change in the past 35 days, only gotten worse really. so the mkt NEEDed the fed to be dovish, and all the weak data gave fed the cover it needed.
the Fed now has not just ‘bent’ its knee…..going from 3 to 2 to 0 hikes in like 90 days…but now what? earnings??? 5% eps growth with expectations to slow, isnt getting us to 18x estimates….were already expensive post bounce here.
CTAs going to max long? please do so….and who is left to buy?
ive been talking about resteepening for at least 4 months….i’ll need to x-reference mcgillicutty to see who was first.
Yeah it’s hard not to frame this as one where the Fed is going along with the market to drown the economy-baby to save itself for just a little longer before the “synchronized global slowdown” storm finally arrives on US shores.
I want to alert readers on the steadyness in GOLD prices. Even against EURO. Lets reflect the last few months. We had a FED under new leadership of Mr. POWELL, who seemed to believe in continuing dynamic growth. Causing them to lean to the hawkish side and deliver on their promise to end QE, shrink the balance sheet over time and orchestrate a move to normality, we had before 2008/9. With the stock market behaviour in 2018 HY-2, and the rants from Donald, Powell lost all his gut and gave in, by shifting the language from hawkish to dovish. While that might be the right thing to do, it appears to me, that steadily growing interest in GOLD is signaling, that investors finally appear to understand, that the FED and central banks in general may no longer be on top of events, but falling behind the curve and re-act instead of act in advance. In other words… Investors might have growing doubts, that an institution of the statue of the FED, no longer can control events. In such cases you better look for shelter in something, that has no authority other than -relative- dearness.
One thought on the “capitulation” issue: perhaps the FOMC is merely blowing smoke in order to prevent the market from panicking, and its real objective is to allow QT to continue.
That could be wishful thinking on my part since I’m short, but it could also be true. All they said was that they might think about a future end to QT. That’s hardly concrete.