{"id":40509,"date":"2016-10-27T11:46:49","date_gmt":"2016-10-27T15:46:49","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=40509"},"modified":"2016-10-27T11:46:49","modified_gmt":"2016-10-27T15:46:49","slug":"will-there-be-a-november-surprise","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2016\/10\/will-there-be-a-november-surprise\/","title":{"rendered":"Will There Be A November Surprise?"},"content":{"rendered":"<p style=\"margin: 0 0;\"><img loading=\"lazy\" decoding=\"async\" src=\"\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/GeorgeYacik_Contributor_ImageBadge350.png\" alt=\"George Yacik - INO.com Contributor - Fed &amp; Interest Rates\" width=\"350\" height=\"131\" class=\"alignleft size-full wp-image-30496\" style=\"padding-top: 10px;\" srcset=\"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/GeorgeYacik_Contributor_ImageBadge350.png 350w, https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/GeorgeYacik_Contributor_ImageBadge350-300x112.png 300w, https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/GeorgeYacik_Contributor_ImageBadge350-270x100.png 270w\" sizes=\"(max-width: 350px) 100vw, 350px\" \/><\/p>\n<p style=\"margin: 0 0;\"><br style=\"clear:both;\"><\/p>\n<p>In its most recent Beige Book, covering late August through early October, released last week, the Federal Reserve noted that although economic \u201coutlooks are positive, contacts in several sectors cite the upcoming presidential election as a source of near-term uncertainty, delaying some business decisions.\u201d <\/p>\n<p>The same could be said for the Fed itself. How much uncertainty has it created and business decisions has it delayed by its endless dawdling and indecisiveness on whether or not to raise interest rates? No matter who wins the vote, the election will end \u2013 maybe not on November 8, if it can be shown that someone did, in fact, rig the voting \u2013 but eventually, Donald Trump or Hillary Clinton will become president. But we have no such certitude that the Fed won\u2019t continue to tease the markets about when it will start normalizing monetary policy.<!--more--><\/p>\n<p>The Fed\u2019s next FOMC meeting will be held next Tuesday and Wednesday, when at 2:00 PM Eastern time it will announce its rate decision. Most people, myself included, believe the Fed will take a pass in deference to Election Day, which takes place less than a week later. But there\u2019s no assurance that the Fed will do anything at its meeting in mid-December, either.<\/p>\n<p>Perhaps the Fed should come up with a new strategy. Rather than waiting for the end of each meeting to announce its decision, which becomes effective immediately, maybe it should instead announce at the November meeting that it will raise rates effective after the next meeting, to save everyone the continued suspense of wondering what is going to happen. <\/p>\n<p>Is that not the way just about every other government edict is handled? Of course, it is. If taxes are going to be raised, the IRS provides months of forward notice what the new rates are going to be and when they go into effect. When new regulations are set to go into effect, businesses are given months, sometimes years, of notice so that they can plan accordingly. The same thing happens in the private sector. Health insurance companies, for example, give their business customers months of advance warning before rates are set to increase, by how much and when. <\/p>\n<p>Why can\u2019t the Fed do the same? Instead, the financial markets, consumers, and businesses are held in a constant state of not knowing what exactly the future holds, making it very difficult to plan. <\/p>\n<p>Right now, the timing of the Fed\u2019s next rate move is still up in the air, and the most recent reports on the U.S. economy don\u2019t provide much of a hint. Indeed, the economy doesn\u2019t appear to be any stronger now than it did six months ago, so there\u2019s no reason to believe that the Fed will do anything for the remainder of the year.<\/p>\n<p>Let\u2019s look at some of those recent reports covering the whole economy.<\/p>\n<p>The Fed itself, in last week\u2019s Beige Book, continued to say that the economy is growing in most Fed districts at a \u201cmodest or moderate pace of expansion,\u201d virtually the same language it has been serving up for months on end.<\/p>\n<p>The Chicago Fed\u2019s national activity index was once again in negative territory in September, minus 0.14. The August figure was revised even lower, to minus 0.72 from an original reading of minus 0.55. The index has now been in negative territory, indicating growth below the historical average, for 16 of the past 21 months, dating back to January 2015. <\/p>\n<p>On Friday, the government releases its \u201cadvance\u201d estimate of third quarter GDP, which the consensus Street forecast is calling for 2.5% annualized growth. That seems a bit of a stretch, considering that second quarter growth was just 1.4%, and government statistics since then have been showing lackluster growth, as evidenced by the previous two paragraphs. The Atlanta and New York Feds, respectively, are calling for 2.0% and 2.2% growth, which also seem overly optimistic. <\/p>\n<p>None of those statistics warrant a rate increase, based on the Fed\u2019s past reasoning.<\/p>\n<p>Of course, the wild card is the growing pressure within the Fed to raise rates. As we know, three of the Fed\u2019s 10 voting members voted for a rate increase at the previous meeting in September, up from one previously.<\/p>\n<p>Since then, Fed Vice Chairman Stanley Fischer raised some hopes \u2013 mine, anyway \u2013 that he might join that group, and, considering his position and influence, might persuade even more. At the Economic Club of New York on October 17, he gave a talk entitled \u201cWhy Are Interest Rates So Low?\u201d<\/p>\n<p>\u201cNow, I am sure that the reaction of many of you may be, \u2018Well if you and your Fed colleagues dislike low-interest rates, why not just go ahead and raise them?\u201d he began. \u201cYou are the Federal Reserve, after all.\u201d<\/p>\n<p>But then he proceeded to dash any hopes that he was leaning in that direction, noting that \u201cit is not that simple.\u201d Whenever a policy maker or person in authority uses a phrase like that, it\u2019s just a long-winded way of saying \u201cNo.\u201d<\/p>\n<p>So, I\u2019m afraid; the Fed is likely to leave us in suspense once again after next week\u2019s meeting, and maybe after December\u2019s meeting, too. Let\u2019s at least hope we\u2019ll know who the new president is by then.<\/p>\n<p>Visit back to read my next article! <\/p>\n<p><a href=\"http:\/\/www.ino.com\/blog\/meet-george-yacik\/\" target=\"_blank\">George Yacik<\/a><br \/>\nINO.com Contributor - Fed & Interest Rates<\/p>\n<p><span style=\"font-size: 12px; font-style: italic;\">Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.<\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>In its most recent Beige Book, covering late August through early October, released last week, the Federal Reserve noted that although economic \u201coutlooks are positive, contacts in several sectors cite the upcoming presidential election as a source of near-term uncertainty, delaying some business decisions.\u201d The same could be said for the Fed itself. How much [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6920],"tags":[8594,6141,8524,6824,6938,7838,7231,5442,5324],"class_list":["post-40509","post","type-post","status-publish","format-standard","hentry","category-ino-com-contributors","tag-data-dependency","tag-fed-chair-janet-yellen","tag-fed-monetary-policy","tag-federal-open-market-committee-fomc","tag-george-yacik","tag-interest-rate-hike","tag-presidential-election-2016","tag-the-federal-reserve","tag-zero-interest-rate-policy-zirp"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Will There Be A November Surprise? - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2016\/10\/will-there-be-a-november-surprise\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Will There Be A November Surprise? - INO.com Trader&#039;s Blog\" \/>\n<meta property=\"og:description\" content=\"In its most recent Beige Book, covering late August through early October, released last week, the Federal Reserve noted that although economic \u201coutlooks are positive, contacts in several sectors cite the upcoming presidential election as a source of near-term uncertainty, delaying some business decisions.\u201d The same could be said for the Fed itself. 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