Well, not so fast. Both Chair Yellen and Vice Chair Fischer keep telling the world that they support raising rates this year — causing more confusion and frustration. Then we get earnings kickoff, and the results are mixed at best. Even the beats are getting punished as investors grow more concerned about what the future looks like. Then on Wednesday, we got hit with more weak U.S. macro data: Retail sales, a direct read on the consumer, came in weaker than expected; PPI, the index that details final demand, declined by 0.5 percent; and prices for final demand goods fell by 1.2 percent. None of these data paints a bullish picture at all.
Here's the bottom line: The Fed needs to get its act together. They need to stop being delusional about the state of the U.S. economy and the global economy. They need to be clear. Now, that does not mean that the different members can't have their own opinions. What it means is that Chair Yellen needs to take control. She should make clear to global markets that any talk of raising rates is now a 2016 conversation. Period. The end.
It is not happening in October and it surely should not happen in December, when the country will be facing another leadership crisis and debt ceiling crisis and government shutdown. Effective Nov. 5, the country will run out of money, but Congress has conveniently voted on a stop-gap spending bill that will take us to Dec. 11. The next Fed meeting is Dec. 15-16. Think about it: If the Fed did not move on rates when they clearly should have in April, May, June or even July, when there was relative calm in global markets, does it really make sense to do it in December, when Washington will be on the edge, global markets are in turmoil and the data do NOT support it?