Faltering Thursday – Fed’s Hawkish Minutes do not Help the Market

2%.

That’s the target rate for the end of the year so 1.5% to go is a lot of rate hiking and many members of the FOMC would like to go with a 0.5% hike at the next meeting on May 3rd and they kind of have to – because there’s only 5 meetings after that.  We had a long discussion about it in yesterday’s Live Trading Webinar (“Deep Dive into Rates and FOMC Minutes“), so I’m not going to get into it again this morning but, to sume it up – “Everything is proceeding as I have foreseen” which, unfortunately, is not a great thing.

What remains to be seen is how the Bond Market will react to the Fed fixing their balance sheet reduction at $95Bn per month and it makes us wonder who is going to be buying Treasuries if the Fed is going to stop?  At the moment, we have Russian Oiligarchs clamoring for liquid US Funds so we have no problem selling notes to their proxies (oh grow up if you think that’s not happening!) but what happens when we have to have real auctions – how much will the US have to pay to borrow the next $3.5Tn that’s budgeted over the next 12 months. 

And that deficit is WITHOUT addressing Climate Change which, according to the UN’s Intergovernmental Panel on Climate Change (IPCC), the US alone will need to commit $2Tn per year between now and 2030 in order to meet our goals of halving emissions by then.  That’s 10% of our GDP and most countries need to do the same and, so far, none are.   

According to the report, we have passed the window where we can hold Global Warming down to 1.5 degrees Celcius – which is where we needed to be to avoid catastrophic consequences that will cost us more than $2Tn per year to deal with – like the partial or complete loss (in 25 years) of Miami, New Orleans, New York, Atlantic City, Key West, Galveston, Seattle, Los Angeles, Charleston, San Diego, Fort Lauderdale, Hoboken, Honolulu…

This IS happening people and they are…

Provided courtesy of Phil’s Stock World.