Correspondent, Chicago
Ann's Feed
Apr 29, 2015
via MacroScope

As Fed’s statement shrinks, data looms larger

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Perhaps the most notable aspect of the Federal Reserve’s April statement is its brevity: at just 560 words, it’s the shortest post-Fed-meeting statement since October 2012.  In saying less about its much-anticipated first interest-rate hike, the Fed is nudging markets to pay attention to other stuff. Like, for instance, the April jobs report next Friday, and the May jobs report one month later. “The Fed is data dependent,” says Eaton Vance portfolio manager Eric Stein. “They’d like to get to a world where the market will react more to numbers rather than Fed meetings and statements.”

Apr 28, 2015
via MacroScope

Data isn’t as objective as the Fed might have you believe

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Fed officials say they will be “data-dependent” when it comes to making monetary policy. San Francisco Fed President John Williams feels so strongly about it, he’s even printed up a T-shirt to get that message across. But truth be told, data-dependency is not as objective as it sounds. Data doesn’t dictate policy; it’s the interpretation of data that’s key. What is rate-hike-worthy data to one policymaker is keep-the-pedal-to-the-metal data for another. Take, for instance, U.S. GDP growth. Richmond Fed President Jeffrey Lacker says he expects GDP growth to average 2 percent to 2.5 percent this year, a pace that would justify a Fed rate hike in June. Chicago Fed President Charles Evans expects 3 percent growth this year, and does not believe even that would justify a rate hike until the first half of 2016. So what does it tell you about monetary policy if you see GDP growth of 2.5 percent? Not a whole lot, judging from these two. And the statements of other Fed officials are hardly more helpful. Indeed, as Atlanta Fed President Dennis Lockhart said recently, “I don’t think it is advisable to approach such a decision with rigid quantitative triggers in mind.” Watch the data, sure. But don’t assume the data will tell you much about the exact timing of the rate hike. Monetary policy – it’s subjective. Maybe some policymaker will print that on a T-shirt.

Apr 24, 2015

Flash crash trader’s CME seat: bought for $435,000, now worth just $69,500

SAN FRANCISCO/CHICAGO, April 24 (Reuters) – The UK-based
trader accused by U.S. authorities of making more than $40
million manipulating markets and contributing to the 2010 Wall
Street flash crash was on the losing end of at least one trade:
his purchase of the CME Group seat that helped to make the
alleged scheme possible.

Navinder Sarao bought the seat in May 2008 for $435,000,
only a few months before the financial crisis hit, exchange
records show; it’s now valued at just $69,500, an 84 percent
decline. He still owns it, an exchange spokeswoman confirmed.

Apr 23, 2015

Analysis: Delayed flash crash arrest may herald future spoofing detection woes

By Douwe Miedema and Ann Saphir

WASHINGTON/SAN FRANCISCO(Reuters) – The five years it took
regulators to bring high-profile charges against a UK trader
underscore how hard it is to spot wrongdoing in fast-developing
markets, and may herald problems in detecting future mishaps.

Navinder Singh Sarao, 36, was arrested in London on Tuesday,
charged with market manipulation and wire fraud. Authorities
sought to link his activities to the May 6, 2010, so-called
flash crash when about $1 trillion was temporarily wiped out
from U.S. stock markets in a matter of minutes.

Apr 23, 2015

Delayed flash crash arrest may herald future spoofing detection woes

WASHINGTON/SAN FRANCISCO (Reuters) – The five years it took regulators to bring high-profile charges against a UK trader underscore how hard it is to spot wrongdoing in fast-developing markets, and may herald problems in detecting future mishaps.

Navinder Singh Sarao, 36, was arrested in London on Tuesday, charged with market manipulation and wire fraud. Authorities sought to link his activities to the May 6, 2010, so-called flash crash when about $1 trillion was temporarily wiped out from U.S. stock markets in a matter of minutes.

Apr 13, 2015

Exclusive: Fed’s Williams sees less risk of rate retreat after lift-off

SAN FRANCISCO (Reuters) – As the U.S. job market improves, the risk is receding that an unexpected setback could derail the recovery once the Federal Reserve raises interest rates, San Francisco Fed President John Williams told Reuters.

Concern that it could be forced to retreat to near-zero interest rates, where the Fed has little room to maneuver, if it pulled the trigger too soon has been a significant reason the Fed has kept rates pinned to the floor well into the recovery. With that less of a threat, policymakers can now focus on charting an appropriate rate path and worry less about sliding back to zero, Williams said in an interview late on Friday, expressing a view that appears to have taken root more broadly at the central bank.

Apr 10, 2015

PG&E fined record $1.6 bln for deadly California pipeline blast

SAN FRANCISCO, April 9 (Reuters) – Pacific Gas & Electric
Corp must pay a record $1.6 billion in penalties
stemming from a natural gas pipeline explosion in 2010 that
killed eight people near San Francisco, California’s chief
utility regulator ordered on Thursday.

The penalty levied for the deadly rupture in San Bruno,
California, marks the largest ever imposed by the five-member
state Public Utilities Commission, dwarfing a $38 million fine
against PG&E for a 2008 natural gas explosion near Sacramento,
according to the agency.

Apr 9, 2015

PG&E assessed record $1.6 billion penalty for California pipeline blast

SAN FRANCISCO (Reuters) – California’s chief utility regulator on Thursday ordered Pacific Gas & Electric Corp to pay a record $1.6 billion in fines and other penalties stemming from its deadly 2010 San Bruno natural gas pipeline rupture and fire near San Francisco.

The sum marks the largest penalty ever imposed by the five-member California Public Utilities Commission, dwarfing a $38 million fine against PG&E for a 2008 natural gas explosion in Rancho Cordova, California, according to the agency.

Apr 7, 2015

Fed should not raise rates until late 2016 –Kocherlakota

By Ann Saphir

BISMARCK, N.D. (Reuters) – Minneapolis Fed President Narayana Kocherlakota on Tuesday laid out a case for waiting until the second half of 2016 to start raising interest rates, and to then raise them gradually to just 2 percent by the end of 2017.

It was the first time the dovish policymaker detailed his preferred path for “late and slow” rate hikes. His remarks afterwards to reporters suggest he is increasingly worried that market expectations for nearer-term rate rises, fueled by comments from many of Kocherlakota’s Fed colleagues, could knock the wind out of the economic recovery.

Mar 27, 2015

Fed’s Yellen says rate hike may be warranted later this year

SAN FRANCISCO/WASHINGTON (Reuters) – An interest rate hike by the Federal Reserve may be warranted later this year, with a gradual path expected to follow, although a downturn in core inflation or wage growth could force it to hold off, the central bank’s chief said on Friday.

Fed Chair Janet Yellen said that after the first rate increase a further, gradual tightening in monetary policy will likely be warranted. If incoming data fails to support the Fed’s economic forecast, the path of policy will be adjusted, she said.