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17Sep2015 Market Close: U.S. Markets Gave Up More Than One Percent After FOMC Meeting, U.S. Dollar Fell, Gold Rose, DOW Closes Down 65 Points

Written by Gary

Lucy pulled the football out from Linus again after the Fed leaves interest rates unchanged in a wild ride that traders had to enjoy. The Fed's said the 'economy expanding at moderate rate; continue to monitor inflation closely'. The U.S. dollar is down but not out, gold rose to new session highs and crude, while off highs, is relatively unchanged as the DOW closes down 65 points.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Global economy worries prompt Fed to hold rates steady

WASHINGTON (Reuters) - The U.S. Federal Reserve kept interest rates unchanged on Thursday in a bow to worries about the global economy, financial market volatility and sluggish inflation at home, but left open the possibility of a modest policy tightening later this year.

Dollar Drops After Fed Decision

The dollar fell Thursday after the Federal Reserve kept interest rates unchanged.

Stocks Fall as Fed Stands Pat

U.S. stocks ended mostly lower, as central bank officials noted concerns about global market turmoil.

Fed's Decision Could Pressure ECB to Step Up Stimulus

The Federal Reserve's decision to keep interest rates near zero could put added pressure on the European Central Bank to move to keep the euro from strengthening too much and derailing Europe's fragile recovery.

Fed Leaves Interest Rates Unchanged

With the markets in a downturn and economies weak overseas, Fed officials said that they saw little risk in postponing an increase in interest rates.

Fed Forecasts Show Lower Appetite for Rate Rises

Federal Reserve officials see a less aggressive path of interest-rate rises over the next few years, although a strong majority continue to believe they will be able to boost borrowing costs this year.

No Hike!

Made using FinanceLOL.com


Maxine Waters Congratulates Yellen On Not Hiking Rates, Says ZIRP Is Precisely What "Minorities" Need

If there was any doubt that the Fed has now officially lost control, then Maxine Waters' congratulating Yellen on not hiking rates should seal it.

* * *

Following the announcement of a decision today by the Federal Open Markets Committee to hold off on raising interest rates, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, commended the cautious and prudent approach to ensuring continued economic growth of the U.S. economy.

In the statement, Waters noted global market volatility and the fact that many families in minority communities have yet to fully benefit from the progress the economy has made, and encouraged the panel to continue to consider these factors in the panels considerations moving forward.

She released the following statement.

"I am pleased the Federal Reserve under the leadership of Chair Yellen has chosen to exercise a prudent and cautious approach to safeguarding our economy by carefully weighing the full range of economic data in assessing whether to raise interest rates.

Since the depths of the Great Recession, which decimated our economy and left millions of families out of work and displaced from their homes, our economy has made remarkable progress.

But despite these gains, volatility in global markets continues to threaten our economic outlook. Furthermore, persistent slack in the labor market remains, with many families who have yet to reap the benefits of the economic recovery.

Data has shown that for African-Americans and Latino communities, the unemployment rate remains considerably higher than those of their white counterparts.

Moving to prematurely raise rates will endanger the critical economic progress we have made,

Wall St. rallies, then fades, after Fed holds rates steady

(Reuters) - Wall Street gave up a more than 1 percent rally on Thursday as investors struggled to interpret the Federal Reserve's decision to hold off on raising interest rates.

American Airlines working to recover from flight delays

(Reuters) - American Airlines on Thursday said it was working to get customers in the air after technical problems caused it to halt flights to three of its hub airports.

Fed Rate Wait Doesn't Make it Easy for the ECB

The Fed's decision to stand pat on interest rates again doesn't help ECB efforts to spur eurozone growth.

What We Read Today 17 September 2015

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

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17 September 2015 FOMC Meeting Statement: Federal Funds Rate Unchanged

Econintersect: The Federal Open Market Committee (FOMC) - the board of directors of the Federal Reserve continued to give no clues as to when they will raise the Federal Funds Rate. However, their statement implied that low inflation was the primary reason for delaying increasing the Federal Funds Rate. The decision not to raise rates was not unanimous. They stated ....

.... Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.

The FOMC is not seeing improvement in the economy although they forecast the economy will grow faster than their June projections (see end of this post).

Fed's Hesitance, Not Its Decision, Surprises Economists

While many on Wall Street expected the Fed to delay raising rates, few expected its language about future moves to be so dovish.

VIX ETF Near Limit Down (Again) - Biggest 3-Day Drop On Record

For the 3rd day in a row VXX (the VIX ETF) has been crushed lower (nearing its 10% circuit-breaker limit-down). This is the biggest 3-day drop in VXX on record...

This is VXX's biggest 3-day drop since inception..

as it is testing back to its 50- and 100-day moving-average...

September 2015 Philly Fed Manufacturing Slides Into Contraction.

Written by Steven Hansen

The Philly Fed Business Outlook Survey has transgressed into contraction. Key elements are mixed.

QE Trade "On" - Stocks & Bonds Soar After Yellen Admits "Quite Uncertain" On Economy

Here comes QE4... *YELLEN: 'QUITE UNCERTAIN' HOW ECONOMIC OUTLOOK EVOLVES

U.S. jobless claims at eight-week low; housing starts fall

WASHINGTON (Reuters) - The number of Americans filing new applications for unemployment benefits fell last week to the lowest level in eight weeks, suggesting the labor market continued to strengthen despite the recent tightening in financial market conditions.

Fed Chickens Out Again, Fails To Raise For 55th Consecutive Time - FOMC Statement Comparison

Goldman wins again.

With a 54-0 record without a rate hike (better than Floyd Mayweather's), and 58 Economisseds expecting no change, 3 a half-pregnant 13bps hike, and 53 expecting a 25bps hike, The Fed was always going to break someone's heart today. Bond yields and the USD were tumbling into the decision, which appeared correct as The Fed chickened out again...


**FOMC: NO POLICY CHANGE, 0-0.25% TARGET 'REMAINS APPROPRIATE'

**FOMC: GLOBAL ECON,FIN EVENTS 'MAY RESTRAIN ECON ACTIVITY'

**FOMC: VOTE 9-1; LACKER DISSENTS, WANTED 25 BPS HIKE

Given the "no hike", it is clear that, as we noted, Goldman is still in charge and Hilsy is still leaker-in-chief. All eyes now on the dot-plots as The Fed desperately tries to regain some credibility, stifle uncertainty, and calmly reassure markets that "we've got your back."

Pre-FOMC: S&P Futs 2000.5, 10Y 2.26%, 2Y 77.5bps, EUR 1.1330, Gold $1118

Additional headlines include:


**FOMC LOWERS L-RUN EQUILIBRIUM FFR EST TO 3.5% V 3.8% JUNE

**FOMC: 11 PARTICIPANTS SEE FFR BELOW 0.5% END 2015 VS 7 JUNE

**FOMC: ECON WILL EXPAND MODERATE PACE W/ 'APPROPRIATE' ACCOM

*FOMC: LABOR MKT IMPROVED,'SOLID' JOB GAINS, UNEMP DECLINING

*FOMC: ONE PARTICIPANT SEES NEGATIVE FFR END-2015 & END-2016

*FED: MKT-BASED MEASURES OF INFLATION COMPENSATION MOVED LOWER

Here are the key changes ...

FOMC Reaction: VIX Crushed As Bonds & Bullion Rip, USDollar & Stocks Slip

"priced in?"

It appears the hedging of the last few days has just been unwound and VIX has been smashed back below 20...

Financials have been sold...

Charts: Bloomberg

FOMC Stunner: One FOMC Member Forecasts Negative Interest Rates Are Coming To The US

The biggest shocker in today's Fed announcement is not that the Fed did not hike: that was telegraphed far away. It is highlighted on the chart below in red: for the first time ever, one FOMC predicts negative rates in 2015 and 2016. Was it permadove Kocherlakota: probably not, he is out next year...

In retrospect, this too should come as no surprise: over the weekend we asked if "Yellen About To Shock Everyone: Goldman Says The "Fed Should Think About Easing." The lack of a hike was not a shock, but the negative dot, oh yes.

And earlier today we hinted at just this: NIRP:

Q. Can an ON RRP operation have a negative stopout rate?
A. Yes
http://t.co/hRvY3Lx9eG

â€" zerohedge (@zerohedge) September 17, 2015

So: instead of QE4 - forget hikes - is the Fed going to shock us with NIRP in the coming months?

Yellen Explains Why The Fed Chicken'd Out Again - Press Conference Live Feed

After 55 consecutive meetings, we should be used to it by now but a lack of forward hawkishness and complete fold to global developments suggest Janet and her merry men (and women) are far more concerned than they have been at the state of the US economy and the world. With reporters under duress to ask the right questions, we can only hope that someone has the stones to ask Yellen when, if ever, they will admit their total impotence and just how cornered they really are...

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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