The US Central Bank just released their monetary policy statement and it was interesting.
They have downgraded both growth and inflation:
US Core PCE (Personal Consumption Expenditures...the FOMC's best measure of inflation):
So what does all of this mean? It means that the US economy is weakening. Chair Yellen also stated that the strong US$ has hurt exports (as we wrote about last week after Wholesale Trade data).
The end results--> stocks came back with the Dow -150 to +223, bonds rallied 2 full points on 30yrs and about a point on 10yrs, the U$ dropped 1.2% and the C$ rallied 1.4%. There are no two main reasons why the Fed can't raise interest rates..1) the US$ is way too strong and the US economy cannot support it and 2) there is way too much Federal Debt in the world to hike rates!
High Rock sponsored athlete, Darren Gardner, finishes a strong season by winning the Canadian Alpine Snowboard Championships
This past Saturday March 14th, Darren Gardner, who High Rock helps sponsor, won the Canadian Championship in Parallel Giant Slalom for Alpine Snowboard Racing. We are pleased to help Darren out in his quest to hit the podium in South Korea for the 2018 Winter Olympics. It is a long hard road but this guy is up to it.
We were able to attend the event (our son was racing too but in a much younger age group) and it was (besides being really cold) awesome to watch. If you have never seen an alpine snowboard race, there is not much more exciting a race to watch. From the way they carve these boards around gates, to the fact they are going head-to-head, to the single-run elimination format, this is one exhilarating winter sport to spectate at.
Well-done Darren. Keep up the hard work during the off-season.
Check out some pictures with more to come. (The 2014 Former Canadian Champ, Steve Barlow, friend and coach to some young up-and-comers and a Future Canadian Champ in there too...?)
Well a picture is worth a thousand words. This chart shows the release this morning in the US of Wholesale Inventories and Wholesale Trade Sales for January. It was the worst of all worlds...US Wholesale Inventories went up...ie...businesses sold less product, arguably exports dropped...and Wholesale Trade Sales went down...again arguably exports dropped. Why?
Because of the massively overbought, most-crowded trade every...the strong U$. It has appreciated so much so fast that it has finally strangled the US economy. Heck, the FOMC doesn't need to hike front-end rates at all to tighten monetary policy because the strong U$ has done the tightening for them.
Our last post talked about Global Competitive Currency Devaluation...well, I think we just hit the breaking point where the weakness in every other currency is too weak to buy U$ goods and services. That is the breaking point.
So if the Fed raises interest rates, they would be adding fuel to this currency fire and it appears that the US economy is already weaker because of the rapid strength in the U$.