Sunday, June 26, 2016

What Now?

Back at the computer after a weekend away and I’m now consuming a massive amount of commentary on the shock that is “Brexit”. As I read the attention grabbing rambles from economist types, I get almost (one exception so far) nothing that sounds remotely good — from a macroeconomic standpoint. From the investment types I find the field fairly split between doomsayers and pollyannas. 
Having done what I do for as long as I’ve done it, I’ve become committed to a cynical narrative that says the blokes whom you see on CNBC and read in the Wall Street Journal, etc., tend to — intentionally or otherwise — preach their positioning.  Meaning, if they’re bullish and long (own) stocks, their eyes are forever blinded by shiny silver linings. If, on the other hand, they’re bearish and short (betting on a drop) stocks, they see nothing but dark tunnels without the slightest glimmers signaling forthcoming ends.
That said, on deeper analysis it may be that, whether we’re talking economists or analysts, the folks whose stature puts them on the media stage are doing little more than exhibiting their personality traits, supported by the bias-confirming data that they unwittingly mined on behalf of impulses they can’t control (much of my recent study has been on trader/investor psychology).
Ok, so beyond my cynicism and psychobabble, what’s next?
Well, when it comes to Brexit, there’s an array of possibilities:
Britain’s Prime Minister Cameron resigned and will clean out his desk on October 1st. If the new PM then passes “Article 50” in Parliament, a two-year negotiation process begins. If they can get it done in that short a span, trade relationships would be normalized and case closed. If they can’t get it done in two years, and both sides don’t agree to extend negotiations, well, there’ll be some real problems when it comes to UK/EU trade. Of course there’ll also be the negotiating of trade agreements between the UK and countries outside the EU, which could be sources of uncertainty all their own. And what if the new PM doesn’t pass Article 50? While there’s rumblings that those who led the leave charge are now exhibiting a bit of timidity, the people have spoken and, therefore, I seriously doubt that the political will exists to not move forward with Brexit. That said, the fact that we’re talking Brexit at all means anything can happen. And I didn’t even get to Scotland and Northern Ireland, UK members that voted to remain in the EU and whose leaders are extremely upset about the outcome. They’re looking into legal interpretations that suggest they can stand in Brexit’s way. So, confusion rules for the moment…
Ok, so what’s next for the markets?
Well, I can get really into the weeds and start with currencies, and how the dollar and the yen will strengthen and how virtually everybody else’s will weaken. And how such strength won’t bode well for the U.S.’s and Japan’s equity markets (although Japan is up 2% as I type [go figure!]), and how the pound — along with UK and other EU members’ equities — will continue to get utterly, well, pounded.
But wait a sec! While the above accurately describes Friday, and I suspect tomorrow — and who knows how long after that — the UK will remain in the EU, with all its trade advantages, for at least the next two years. And I suspect that it won’t be long before typically myopic markets will wake up to that fact and, thus, begin to calm down. Plus, according to Ned Davis Research:
… more often than not, the stock market quickly recovers from the losses it inevitably incurs in the immediate aftermath of such a crisis. On average across all 51 crises, the Dow Jones industrial average within six months was higher than where it stood prior to the market’s initial plunge. Within a year it was 6.3% higher.
… on a median basis, shocks normally cause stocks to bottom out six days after the shock hits, with a total drop of 5.3%. And in looking at the 14 market “shocks” since World War II, the market has taken a median of just 14 days to recover all its losses
While history is never a sure thing, it does advise strongly that times like these are times to, at a minimum, hunker down. At a maximum, they’re times to buy like crazy (but, in my very strong opinion, only if it happens to be time to rebalance your portfolio within your established strategy/discipline, or if you have cash that was already en route to the equity portion of your portfolio — and only if you’re patient and have a strong stomach. And, please, forget the “like crazy” part!).
Of course the above begs the question, am I not just another one of those advisers who preaches his positions and/or is a slave to his personality traits? And, therefore, since our clients all own equities to one degree or another, am I not simply one of those blind polyannas and/or a hopeless happy-go-lucky optimist? Well, that all could be. However, in my own defense, if you’ve been watching my videos for the past few months you know that I’ve been somewhat of a party-pooper on the recent rally. But now, after Friday’s plunge and the likelihood of more near-term pain to come — while I’m not ready to freshen up the punch bowl just yet — don’t be too surprised if I start sounding a wee bit cheerier in the not-too-distant future…

Friday, June 24, 2016

Weekly Update: What Just Happened??

So What Just Happened??

As I type the Dow future contract is implying a 525 point plunge at the open. This follows a 230 point gain on Thursday that was clearly all about the betting odds and the majority of prognosticators assuring the world that UK citizens aren't nearly bold enough to venture into an unknown that the world's experts promise would be far too treacherous to traverse.  

Ah, but those brave Brits (52% of them anyway) went ahead and voted themselves into the dark forest nonetheless! So what's it all mean?

Well, perhaps first and foremost, they get their identity back. There'll be no more subjugating to bureaucrats in Brussels and their cronies.  They'll control their own borders and, thus, their jobs market. They'll preserve their social services for themselves and, thus, not see those resources depleted on behalf of immigrants whom Angela Merkel says they must embrace. And they'll no longer contribute to, and succumb to, a regulatory regime that they believe stifles their economic growth potential.

So who could argue with that? And why are the world markets so upset?

For starters, Britain's trading partners --- Asians included --- worry that the political and regulatory uncertainty would do across-the-board economic harm. The International Monetary Fund and the majority of mainstream economists had threatened of long-term negative effects. The UK's own treasury warned that:
...the UK would be permanently poorer if it left the EU and adopted any of these models. Productivity and GDP per person would be lower in all these alternative scenarios, as the costs would substantially outweigh any potential benefit of leaving the EU.

The negative impact on GDP would also result in substantially weaker tax receipts, significantly outweighing any potential gain from reduced financial contributions to the EU. 

Here's CNBC on the global implications:

And here's why the fallout is global

Yeah, it does sound hyperbolic, but there are actually a couple arguments for why a British exit may hurt the rest of the globe.

In Europe, the EU could run into economic trouble for a couple of reasons. The lengthy and as-yet ambiguous exit negotiations could cripple investment, as mentioned above, but they could also lead tomore exits. Nationalist groups across Europe will be watching the referendum closely to see if they can use the results into their advantage.

Elsewhere, the economic risks are best understood as a function of uncertainty. EU uncertainty: If financiers and companies are concerned that they may get cut out of free-trade channels, they may find safer (which is to say, less productive) uses for their money. And British uncertainty: All those billions of dollars already invested in the U.K. and invested abroad by British entities could be in limbo as London rushes to negotiate new non-EU trade deals with key partners.

In the U.S., billions, if not trillions, of dollars could be called into question by a British exit: In 2014, American direct investment into the EU totaled about 1.81 trillion euros, and about 1.99 trillion euros flowed in the opposite direction, according to the European Commission.

If even a small percentage of that is disrupted, it could reverberate across the globe.

Similar concerns apply for Chinese, Indian, Japanese and other international companies and investors.

And then there's the issue of currencies...

With all of that uncertainty rushing around, a British exit will likely result in a massive rebalancing of currencies.

Investors will (and have already begun to) dive out of the British pound and into cash that's perceived as safe — the Swiss franc, the Japanese yen, the U.S. dollar. The euro could also see some weakening if investors are worried about the fate of the EU.

While being a safe haven could sound like a boon for the U.S. economy, such a large, sudden currency swing could have significant negative implications for American multinational corporations.

The fallout from those currency moves could be another source of short- and medium-term economic tumult.

As for the next potentially two-years of negotiations, will, as some believe, the EU play hardball with the UK ? Issuing a punishment that might deter others from following suit? Or does --- as I believe --- blogger Polemic Pain have it right?
Posted: 23 Jun 2016 08:15 PM PDT

Humankind has a natural inclination to avoid pain. If UK votes to leave and it threatens other countries' economic stability then other countries will do what they can to alleviate it. 

There is punishment and there is mutually assured destruction. It's much like the cold war. Threats are made but when fingers are on buttons they will waiver and diplomacy will take over to avoid net sufferance. 

I cannot believe that the EU, whose behaviour has constantly displayed a 'whatever it takes' response to survival, would let a Brexit vote paint themselves into a corner of sufferance. 

As any parent knows, threats of punishment before the action are a different matter once the action has taken place. Negotiation and compromise is still most likely. 

If we seriously think that, as the FT has suggested, the likes of the Mexican Peso's fate is in the balance of Brexit then something is messed up. Shock is one thing but reality is another. The tertiary correlations should be faded. 

Look at this as the Cuban missile crisis. Sense will prevail to protect the majority. If you don't believe me look at the response to the global financial crisis. The masses were forgiven their debt to preserve society.

Here's last night's commentary in case you missed it:


Saturday, June 18, 2016

Weekly Update: The Fear of Losing vs The Fear of Losing Out

The market really wants to eclipse its May 2015 high, but (per the chart below) traders just can't seem to bring themselves to pay quite that much for the shares of stocks that comprise the Dow Jones Industrial Average. Not when they fear that emotion-driven players would sell on the next Fed rate hike, or, scarier yet, when the prospects for Great Britain's citizens voting themselves out of the EU (they call it "Brexit") are --- according to the polls --- tilting toward that end.   click each chart, then click again, to enlarge...

Dow Jones Industrial Average

Well, after this week's Fed meeting announcement and dovish Janet Yellen's press conference, Thursday's message from the no longer hawkish St. Louis Fed President James Bullard, and the probabilities derived from Fed funds futures trading, the odds of more than maybe one rate hike this year just careened off the proverbial cliff.

So, for the moment anyway, the Fed headwind appears to be nothing more than a pleasant breeze.

But what about Brexit? If you believe the polls it's very much in the cards---and if you believe market signals, it could get ugly. However, if you believe the betting line, hedge fund managers, and the majority of pundits, the odds are pretty slim. If you believe me, you'll believe that a year from now the outcome of next Thursday's vote (whatever it may be) will not remotely be the topic du jour.

Ah then, so after the Brexit dust settles --- and since the Fed has turned off the fan --- traders should have little trouble pushing the market to new heights and beyond! Right? Well, I dunno...

We have to assume that the above (the Fed off the table and Brexit not being a long-term problem) is not some great revelation of yours truly. We have to assume that the above entirely credible narrative isn't lost on traders and investors at large --- I assure you it's not! So why then is it --- per the following --- that the uncertainty surrounding the market remains palpable?

Here's a look at the most cited sentiment index out there; a survey performed weekly by the American Association of Individual Investors:

AAII Survey

I.e., individual investors are not presently feeling all that positive about stocks --- not at all!

And, per the Bank of America Merrill Lynch Fund Manager Survey (HT Fat Pitch Blog), nor are mutual fund managers. They're presently holding very large cash positions and are unusually underweight stocks:

Mutual Fund Managers overweight cash and bonds

I.e., their risk appetite (per their equity allocation and cash levels) is exceptionally low:

Mutual Fund Manager risk apetite

Funny thing is, stocks tend to do really well following periods of really low sentiment:

SP 500 at times of mf mgr low risk appetite

Really funny thing is, the more pessimistic the average investor is, the more optimistic you and me ought to be. Per below (HT Bespoke Investment Group), when bullishness is at its lows, the market tends to move higher over the ensuing year. And, conversely, when sentiment is at its highs, the market tends to trade lower:

25. SPX and AAII Bullish Sentiment

So why would that be? Well, two things: One, when nobody thinks stocks are the place to be (low bullish sentiment), nobody owns them --- everybody's cash-heavy. Therefore, when everybody's in cash there's plenty of fuel to stoke the market on the first spark of good news. And, conversely, when everybody thinks stocks are the place to be (high bullish sentiment), everybody owns them --- and there's little cash on the sideline. Therefore, when everybody's fully invested in stocks there'll potentially be huge selling pressure on the first spark of bad news, and there'll be very few, if any, cash-hoarding bargain hunters prepared to jump in and douse the flames.

The other way to look at it is in the context of fear --- or types of fear. When we're talking investing, or, more so, trading, we're talking two kinds of fear; the fear of losing and the fear of losing out. When folks are bearish, thinking that the market's going lower, they fear losing --- so they stay out of the market. When folks are bullish, thinking that the market's going higher, they fear losing out --- so they're all in. Given that emotion is forever a moving target, or, let's say, pendulum-like, we know that it tends to migrate to and fro between the polarities. Thus, as cloudy skies clear (as they always do) and the consensus emotion begins moving from the fear of losing toward the fear of losing out, folks must buy (pushing stock prices ever higher) if they're to quell their jitters. And, conversely, when clear skies cloud (as they always do) and the consensus emotion moves from the fear of losing out to the fear of losing, traders have to sell (pushing stock prices ever lower) if they're to calm their butterflies.

So, while I have just enlightened you on why sentiment indicators are important things to track, I haven't solved the mystery of why the presently palpable pessimism (fear of losing). Well, my best guesses are Brexit, various coming elections, mixed global economic prospects, rich stock valuations, dire signals sent by phenomenally low bond yields and many more bad-sounding things that I just can't think of at the moment (it's late Friday evening). I guess the good news is there couldn't have been a time in history where sentiment was this low without a whole lot of bad news inspiring it. Hmm...

Does this mean that I'm a raging contrarian bull promising a bountiful 2016? Nope, just pointing out that the stage is set. The timing of the next break higher is anyone's guess, and we could easily break lower --- and maybe add to our positions at cheaper prices --- in the meantime.

Good thing you and I are calm, patient, opportunistic, long-term investors!

Have a great weekend! I know you'll all be very busy fawning over your fathers, your fathers in law, your stepfathers, your stepfathers in law, your fathers' fathers, your stepfathers' fathers, and (to our youngest subscribers) your fathers' fathers' fathers and your stepfathers' fathers' fathers come Sunday. Don't want you forgetting anybody! :)


Saturday, June 11, 2016

Friends Meet Up

Read an article this morning that got me scribbling. Friends meet up:

How's it going?

Eh okay.

You seem down??

Bernie's not gonna get the nomination!

Ah, you're a Bernie supporter.

Yes, and it's really sad that he won't get a chance to change this country.

So it's pretty bad out there?

It's horrible. The rich and the big corporations are stealing our lives away and making themselves richer and more powerful by the minute. They run this country and we have to somehow get it back!

So what're you doin today?

I guess the usual Saturday stuff. Hit the gym around 10, meet Brenda at Starbucks around 11:30, got a little housework to do, then I'll either catch a movie with Bill or maybe we'll take a drive to the hills or the beach. If we do the beach we'll probably stay overnight. Or maybe we'll stay home and catch something on Netflix tonight...

How's work?

Eh okay... I make decent money, but I just don't love it. Thinking about making a change. There are a couple of competitors out there that I'm sure would sweeten the pot to get me to move. Or I might go back to school and get my masters.

Well, sounds like you have options.

Yeah, there are a lot of opportunities out there. You just gotta go after em!

Any vacations coming up?

Nothing definite. Can't decide between Alaska and Yellowstone... Did Yellowstone a few years ago and loved it!


Friends meet up:

How's it going?


What's up!

Trump's gonna win the White House, I just know it!

You seem pumped!

Totally! This country is going into the s&*!ter and Trump will make it great again!

So you're okay with the foreign trade and immigration stuff he's talking about?

Hell yes! That's the crap that's killing this country!

How do like your android?

It's pretty cool. I switched from the iPhone and can't decide which one I like better. I'm going to go ahead and get a tablet, they're finally priced low enough to justify it, so I'm thinking about the iPad and going back to the iPhone at the same time.

How's the old car holding up?

Funny you ask, that's what I'm doing today. It's finally giving up the ghost, so I'm gonna go test driving this afternoon.

Got our eye on anything?

Definitely an SUV. The new explorer is pretty cool, but I love that mid-sized Lexus too. I'm going to check them both out and probably look at something else if I have time. Hey, what're you doing for lunch? There's this authentic Chinese restaurant that just opened up around the corner. The family barely speaks English, but man the food is incredible!

Sounds great! But I'll have to take a raincheck. I'm meeting Marsha at 11:30 at some Mexican place downtown.

Is it that one on 'M' street?

Yeah, I think so.

OMG! I love that place! Have fun! Oh, hey, if you're free Sunday night come on over and watch the finals with me. I gotta new 60-inch Samsung and you won't believe the picture!


Friends meet up:

How's it going?


What's up?

Hillary's going to win the White House! I just know it!

You seem pumped.

Hell yes! It's about time a woman ran this country.

Is it about Hillary, or is it about her being a woman?

Ha! It's about both. But mostly it's about Hillary, I sure as hell wouldn't have voted for Carly! And Hillary's the most complete candidate! Here, I was just looking at her website. Take a look at her positions on all of these issues. I am so excited!


Learn more about Hillary’s vision for America, and key policies she will fight for as president. As Hillary campaigns across the country, she'll be talking about more issues—stay tuned.


Addiction and substance use

Through improved treatment, prevention, and training, we can end this quiet epidemic once and for all. 


Campaign finance reform

Our democracy should work for everyone, not just the wealthy and well-connected.


Campus sexual assault

It’s not enough to condemn campus sexual assault. We need to stop campus sexual assault. 


Climate change 

Making America the clean energy superpower of the 21st century. 


Criminal justice reform 

Our criminal justice system is out of balance. 


Disability rights 

We must continue to expand opportunities for all Americans. 


Early childhood education 

Every child deserves the chance to live up to his or her God-given potential. 

Fixing America’s infrastructure

Strong infrastructure is critical to a strong economy. 

Gun violence prevention

It is past time we act on gun violence. 

Health care

Affordable health care is a basic human right. 



We have reached a critical moment in our fight against HIV and AIDS. 


Immigration reform

America needs comprehensive immigration reform with a pathway to citizenship. 


K–12 education

A world-class education for every child in every community. 


Labor and workers’ rights

When unions are strong, America is strong. 


LGBT rights and equality

Lesbian, gay, bisexual, and transgender Americans deserve to live their lives free from discrimination. 


Making college affordable and taking on student debt 

The New College Compact: Costs won’t be a barrier, debt won’t hold you back. 



Manufacturing is critical to the U.S. economy. 


National security

With policies that keep us strong and safe, America can lead the world in the 21st century. 


Paid family leave

It’s time to guarantee paid family and medical leave in America. 

Protecting animals and wildlife 

The way our society treats animals is a reflection of our humanity. 


Racial justice

America’s long struggle with race is far from finished. 


Raising incomes and fighting inequality

The defining economic challenge of our time is raising incomes for hard-working Americans. 


Rural communities

America’s rural communities are at the heart of what makes this country great. 


Seeking a cure for Alzheimer’s disease

We can prevent, effectively treat, and make an Alzheimer’s cure possible by 2025.


Small business

Hillary Clinton will be a small business president. 


Social Security and Medicare 

We must preserve, protect, and strengthen these lifelines. 


Veterans, the armed forces, and their families 

America must fully commit to supporting veterans. 


Voting rights

We should be making it easier to vote, not harder. 


Wall Street reform 

Wall Street must work for Main Street. 


Women’s rights

Women’s issues are family issues, economic issues—and crucial to our future competitiveness. 


Workforce skills and job training 

Every American should be able to learn new skills in order to advance in their careers. 


Wow! She's going to be a very busy woman!

What're you doin today?

Gonna hang out with my nephew Jake. He just lost his job and he's kinda in the dumps.

Oh, sorry to hear that!

How'd he lose his job?

Well, he's just a kid and he doesn't have much experience. The place he was working established a hiring freeze last year when the minimum wage went up and they had to start providing health insurance. Now they're starting to cut people. It's sad!

What're his options?

Well, he'd like to get a union job but, again, he doesn't have enough experience or skills to justify what the company would have to pay him.

What about school?

He's just not much of a student. I told him I'd help financially, plus he'd qualify for all kinds of assistance, but I can't seem to get him motivated. It's sad! If somebody would give him a chance I know he could grow into a great employee and one day make a nice living. He's a really hard worker.

Friday, June 10, 2016

Your Weekly Update: The Fed's Hope Part Two

Friday saw a selloff that, in my view, hardly discounts the threat of the Brits voting next week to leave the European Union. However, the VIX index, which reflects implied volatility in S&P 500 options (rises when option investors see risk) spiked nearly 17%, Eurozone stocks tanked, Eurozone bonds rallied and the British Pound sank on polls suggesting that the majority of voters favor leaving the union --- now that’s what I’ve been talking about!

So, does this mean that the somewhat pessimistic technical picture for the U.S. market I’ve been illustrating of late will ultimately prove prescient? Perhaps. But keep in mind, this has been a short-term view that might have us hesitating with new cash to allocate, but not have us fret in the least over our diversified long-term equity portfolios. More on that stuff next week.

Today we’re going to explore some business cycle history and consider the possibility that the Fed might be blessed with yet another opportunity to get interest rates to a level that they’ll be able to work with come the next recession.

Here’s your standard business cycle illustration:     click each chart then click again to enlarge...

Business Cycle

The move below the center line indicates recession, above would be expansion. The asset class references below the line point to when each typically bottoms in price, those above the line would be where they typically peak. In a nutshell; during contractions, bonds tend to bottom on the way down, stocks at the nadir, and commodities as the economy begins to accelerate into the next expansion. During expansions bonds tend to peak on the way up, stocks peak at the peak, and commodities peak as we decelerate toward the next recession.

Here’s the real world from the mid-90s to now (red shaded areas = recessions):

3. Business Cycles 1996 to Current, bonds, stocks, commodities

The arrows point to the peaks for each asset class. Notice that prior to, and between, the past two recessions the asset classes followed the playbook. Notice, however, that since the Great Recession of 2008 things don’t line up like they “should”! I put question marks at possible peaking points for bonds and stocks, but there’s absolutely no maybe when it comes to the latest peak in commodities' prices. Hmm…

Let’s look at the 80s:

4. Business Cycles 1981 -1991

Now the 90s:

4a. Business Cycles 1989 - 2002

Now look back at the first real world chart. Notice again how bonds, then stocks, then commodities topped --- leading into and during the 2008 recession. Now look again at the 80s and 90s: We had tops during each expansion that were not shortly followed by recession. And notice how midway through both the 80s and 90s commodities had diverged from the path and didn’t follow bonds and stocks higher while they made their ways to their respective peaks.

Here, I’ll make it easier:


80s cycle marked up


90s cycle marked up

Now notice how where we are today looks kinda like the mid 80s and 90s:

Current cycle market up

Bottom line: History offers the Fed hope that asset class peaks and, in particular, commodity bear markets don't always spell recession. And, thus, there’s a chance that a whole new round of expansion can occur --- allowing them yet another opportunity to get right with interest rates. Time will tell!

Have a great weekend!


Saturday, June 4, 2016

Weekly Update: The Fed's Hope

Of course this changes everything! We're done! Kaput! After a month where wild-eyed economists predicted that the U.S. would see 160,000 new jobs, and the economy could only spit out a measly 38,000, well, folks, we better wake up and smell the rotten cheese! Hmm...

For some this is vindication. This is the "see, things are a lot worse than they want us to believe!"... Okay, but that's usually the refrain of folks who think the numbers ain't the numbers --- that the powers-that-be fudge the numbers every month to produce a bogus rose-smell to mask the true limburger. Umm... no... If they could indeed fudge the numbers---halfway through an election year (this election year!!)---I promise you there'd be a 2 smack dab in front of that 38k.

So is the Employment Situation Report perfectly accurate? Umm... no... it can't be. It provides estimates derived from surveys of households and employers. It attempts to capture the number of folks employed and unemployed along with hours worked, wages, etc. And prior numbers often get revised --- Friday's report included a downward revision of 59k for March and April (again, would "they" show downward revisions if they were cheating?).

So then, looking beyond the imperfection of the report, and conspiracy theories, is it time to sound the alarm? Well, probably not just yet. You see, the jobs number is a noisy number. Here's a look at it going back a ways (red shaded areas are recessions).     click each chart then click again to enlarge...

Jobs Number

Per the chart, prints like yesterday's (which, in reality, we should add 35k to to catch the effect of the since-resolved Verizon strike) do tend to occur even when there's no recession looming --- and notice the huge upward spike following several of those mid-expansion disappointments (June's number is going to be interesting!):

In Thursday's video I said that a soft jobs number was my best guess and that below 150k might spark a rally. Now, when I said below 150k, I was thinking like 138k --- wasn't even dreaming 38k! Nor, I assure you, were any Wall Street traders. So, in knee-jerk fashion, the market traded down right out of the gate, with the Dow off 140+ points at its low. However, by day's end stocks had scratched and clawed their way back to a mere minus 31 on the Dow. Suffice it to say that the market does not need to worry over the Fed raising rates come its June meeting.

But should it be (worried over the Fed) in general? Well, for the Fed, in my view things are potentially getting a bit precarious. Take a look at the monthly jobs chart with the Fed funds rate folded in:

Jobs Number and Fed funds rate

And here's the unemployment rate through the past few cycles:

Jobs Number and unemployment rate

For whatever reason(s), the Fed has passed on what history suggests were opportunities to create a more normal interest rate environment and, therefore, presently find themselves in uncharted waters.

Now they're left hoping against hope that there's an economic bounce in the offing that'll give them one last chance to refuel (raise rates) and prepare themselves to navigate the inevitable tempest (next recession) to come. Next week we'll take a deep dive into what history says about their odds.