The financial world would prefer to remain in fetal curl, but events intrude

  • The big deal next Wednesday: Fed hints at the future pace of tightening.
  • In this recovery (not worthy of the name), we’re not creating credit as it is.
  • Post-bubble, heaven help the self-employed, to include incentive or commission or variable income.

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The entire financial world would prefer to remain in fetal curl until the Fed acts next Wednesday, but events intrude. Oil prices falling into the $30s presage even less inflation (Fed oblivious), and create unrest in the stock market (and producer nations). The big deal next Wednesday: Fed hints at the future pace of tightening. Markets are priced for no more than two additional hikes in 2016, but utterly mangled Fed communication suggests four hikes next year, and the year after that, and after that, to be intercepted only by economic swoon. While we wait, study Fed reports of hard data. Avoid the pre-digested goop from Wall Street engines and breathless Web click-candy (“Top 5 reasons to dig hole, bury life savings!”). Original sources without spin are in plain sight. Every 90 days the Fed publishes Z-1, an accounting of the flows and landing places of every dollar in the US financial system. The primary reason the Fed raises the cost of money: to brake the economy ...