ZeroHedge reports this morning on some (more) interior confusion by economists at one of the big banks. The Fed has “raised rates” and yet according to their calculations, all their calculations, financial conditions are for them paradoxically easier.
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Through no action or direction of the Fed, the global “dollar” conditions after February 11, 2016, have been relatively better. The confusion more recently stems from the same set of flawed premises; it was widely believed that the tighter “dollar” conditions of the “rising dollar” period, though “unexpected”, were due to the end of QE and then the first “rate hike.” They weren’t; the global “dollar” pays little or no mind to monetary policy.
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The world doesn’t run on a small cadre of statisticians every six weeks or so fiddling with small changes to a money market rate that no one uses. You can appreciate why economists believe this, because they are those people. So long as they are, and so long as they keep tinkering with only the immaterial, the “dollar” is left to its own devices which has for a decade now meant only trouble. The past year or so hasn’t even been “easing” so much as the space between the last eruption and the next one that markets are starting to sense as more than a sketchy possibility — just like 2014 and the last time conditions were so “easy.”