US Weighs Opening Venezuela Asylum Program To Nicaraguans, Haitians, Cubans
The Biden administration is considering a major expansion of an asylum program that originally targeted Venezuelans, The Wall Street Journal reported Tuesday night. Specifically, the program would widen to encompass migrants from Cuba, Nicaragua and Haiti.
With an eye on decreasing illegal southern border crossings, the program lets migrants from Venezuela apply for asylum from overseas and then fly to the United States. Under the proposal, that privilege would be extended to three more countries.
The news comes on the heels of jarring images from El Paso on Sunday night, as an estimated 1,500 migrants poured across the Rio Grande in a matter of hours. Mostly from Nicaragua, the throng assembled in long lines on the American side to take their turn surrendering to border authorities.
Referring to President Biden, one Nicaraguan man told Reuters, “He is the only president who will help us, we know he will open the door for us.”
BREAKING: A huge migrant caravan of over 1,000 people crossed illegally into El Paso, TX last night, making it the largest single group we have ever seen. The city of El Paso reports Border Patrol now has over 5,000 in custody & has released hundreds to city streets. @FoxNewspic.twitter.com/ewUQX757Lt
U.S. authorities have posted a record-high 2 million arrests at the border over the past year, and the numbers are straining both government and private resources along the frontier.
My latest dispatch from El Paso: It’s not LA, Seattle, or any other city with a homeless problem. Released migrants are staying and sleeping on the cold streets of El Paso because there is no room at local shelters due to the spike in illegal crossings: https://t.co/xNClxaQJjnpic.twitter.com/xBfQvROotH
Even if the proposed asylum-policy expansion manages to put a dent in illegal border crossings, the ease of applying from home would conceivably cause a big spike in the total number of asylum-seekers.
Border officials are bracing for the Dec. 21 expiration of Title 42, a Covid-19-era Trump policy that lets the Border Patrol summarily turn away migrants at the border — including those who were seeking asylum. The policy’s purported intent was to prevent transmission of the virus. In November, a federal judge ruled the policy is illegal.
That means the brisk business at the border is about to surge even higher. While considering it an unlikely worst-case scenario, officials are now planning for 20,000 migrants a day crossing into the country after Title 42 vanishes on Dec. 21.
The Journal reports that the administration is reportedly debating potential immigration deterrence measures. One proposal: Restoring a Trump policy — the “transit ban” — that rejected asylum requests from migrants who passed through another country en route to the U.S. without asking that other country for asylum first.
Meanwhile, Venezuela isn’t accepting its citizens who are deported from the United States. Biden administration officials are talking to their Mexican counterparts, with hopes the country will keep taking such deportees off America’s hands.
Scathing reviews are pouring into the American Girl website and Amazon, and social media users are blasting the popular doll brand for a 2022 book that advises young girls on pronouns, switching genders, and using puberty blockers.
Part of the criticism surrounds circumventing unsupportive parents.
Others, however, have applauded the book for providing guidance on the topics, sending it to No. 1 on Amazon in the category of Popular Adolescent Psychology.
“A Smart Girl’s Guide: Body Image: How to Love Yourself, Live Life to the Fullest, and Celebrate All Kinds of Bodies” rapidly drew attention from around the world after a Dec. 6 report in the London-based Daily Mail.
The $12.99 book was released in February without fanfare.
Amazon users suggest it’s written for ages 8–11; American Girl recommends it for girls in 4th grade through 6th grade.
The 96-page paperback by Mel Hammond depicts girls with different body types and skin colors on the cover. It further signals inclusiveness by showing a girl in a wheelchair and another with blue hair.
Hammond also wrote, “Love the Earth: Understanding Climate Change, Speaking Up for Solutions and Living an Earth-Friendly Life” for American Girl.
The 36-year-old company is best known for its lifelike dolls that can be customized by skin tone, eye color, and hair color and style.
The 18-inch dolls that stand on their own often are purchased to look like a child’s twin.
The company sells an expansive line of matching clothing for child and doll, and a library of books for girls on a wide variety of topics. It was purchased by toy giant Mattel—the owner of the Barbie brand of toys—in 1998 for a reported $700 million.
Early in “Body Image,” the author assures young girls that many different body types exist.
Halfway through the book, the Gender Joy chapter takes a hard-left turn.
It prominently features an illustration of an androgynous child wearing pronoun buttons in front of a transgender flag. The chapter defines terms like transgender and nonbinary, and suggests ways girls can express their gender through haircuts and clothing.
“When a baby is born, a doctor looks at the baby’s body parts to assign its sex—whether the baby is female or male,” the chapter explains. “But for some, that assigned sex doesn’t match who they know they are inside.”
Being transgender is not an illness or something to be ashamed of, the author reassures. The text advises girls to talk with a trusted adult, such as a parent or counselor, if they are questioning their gender identity.
“That person can connect you with a specially trained doctor, who can help you and your family decide what’s best for your body,” the book explains. And girls might want to experiment with wearing clothing and using preferred pronouns that make “you feel most like the true you.”
“Parts of your body might make you feel uncomfortable, and you might want to change the way you look,” the book says. “That’s totally OK!”
“If you haven’t gone through puberty yet, the doctor might offer medicine to delay your body’s changes, giving you more time to think about your gender identity,” the book advises.
Puberty blockers are hormone treatments that, in girls, can halt breast growth, cause facial hair to grow, and deepen the voice. While transgender supporters call them reversible, the impact on fertility is unknown.
Some in the medical field have raised grave concerns recently about the use of puberty blockers in children, citing side effects such as, at least temporarily, stopping growth in height, halting development of sex drive, interfering with fertility, and halting the healthy accumulation of calcium in bones.
The book encourages girls who’ve experienced puberty already to see a doctor if they’re questioning their gender. Studies show transgender and nonbinary kids who get help from doctors have better mental health than those who don’t, the chapter claims.
Proponents of children transitioning often use that argument to encourage it.
One 2022 study appearing in the Journal of the American Medical Association said that transgender patients, 13 to 20 years, who received puberty blockers and cross-sex hormones had significantly lower depression and suicidal thoughts.
Critics, however, say that the lucrative and growing transgender industry suppresses studies showing the opposite is true. The result is the irrevocable harm of children, they say.
A 2021 article published by the BJM, an international medical care advocacy group, found that children 12-15 with severe gender dysphoria had no significant effect on their psychological function, suicidal thoughts, or body image when using puberty-blocking drugs.
The American Girl “Body Image” book suggests parents don’t need to be included in these life-altering decisions. It advises young girls to seek out help from transgender groups, if necessary.
“If you don’t have an adult you trust, there are organizations across the country that can help you. Turn to the Resources on Page 95 for more information,” the chapter suggests.
Resources for those questioning their gender identity include website addresses for The Trevor Project, Human Rights Campaign, and GLSEN for gender-inclusive schools.
The Trevor Project is an LGBT advocacy group offering counseling and a chat feature for youths. The Human Rights Campaign pushes LGBT rights.
Promoting Critical Race Theory
The Gender Joy chapter also introduces children to the term “intersectionality” and provides a worksheet with blanks for listing characteristics, such as gender, race, and age.
Intersectionality is a concept used in Critical Race Theory (CRT) to point out a person’s overlapping belonging to multiple victim groups that subject them to discrimination.
CRT suggests a person with greater intersectionality is deserving of more preferential treatment as repayment for that oppression.
The book highlights the fictional character Ivy—a 10-year-old who is deaf, transgender, and Jewish—as a way of explaining intersectionality to young readers.
Biden Mulls A Dozen Foreign Mining Projects After Blocking Domestic Ventures
While the Biden administration continues to put America last when it comes to – well, most things, they sure are great at handing money to foreign governments.
In the latest example, the administration is considering funding 12 critical mineral mining projects overseas under the guise of fighting climate change, Axios reported Monday.
According to Under Secretary of State for Economic Growth, Energy, and the Environment, Joe Fernandez, “around a dozen” overseas projects are under consideration, including mining, mineral processing and recycling, which would allow the administration to secure ‘critical minerals’ required to manufacture green energy technologies – such as ones the Biden team have blocked in both Minnesota and Alaska over ‘environmental concerns.’
In January, the Biden Department of the Interior revoked two permits for Twin Metals mines in Minnesota which would have produced copper, nickel and cobalt, claiming that they would contaminate nearby watershed. All three of those metals are essential for wind turbine and battery production.
“Joe Biden continues to put foreign jobs over American jobs,” said Rep. Pete Stauber (R-MN), top Republican on the Natural Resources Energy and Mineral Subcommittee in a statement to the Daily Caller. “This activist Administration is pushing an energy transition, which requires minerals.”
The federal Export-Import Bank and the Development Finance Corporation, which is bankrolling a nickel mine in Brazil, will provide the funds to aid overseas mining developments, Axios reported. The Biden administration will use the Mineral Security Partnership, a global partnership that seeks to expedite the procurement of critical minerals, and will work with Canada, the U.K., the European Union and other allies to fund foreign mines.
On Dec. 2, The Environmental Protection Agency recommended preventing operators of Southwestern Alaska’s Pebble Mine from disposing of waste material in the nearby Bristol Bay, a regulation that would prevent the mine from opening. Over a 20-year period, the mine could extract about 1.5 billion tons of copper, molybdenum as well as other critical minerals that are needed to create solar panels and geothermal energy facilities, according to a report published by Northern Dynasty Minerals, the mine’s owner. -DC
“We have an abundance in the United States, including in the Duluth Complex in my district which alone contains 95% of America’s nickel, 88% of our cobalt, and more than a third of our copper,” Stauber said. “For political reasons, the Biden Administration won’t allow domestic mining.”
“On behalf of the American worker, I will hold this Administration accountable,” Stauber continued.
A new poll suggests that more than half of Canadians surveyed are worried about having enough money to put food on the table, while 86 percent of people are worried the country will face an economic recession in 2023.
Food inflation is reported at higher than 10 percent, and the most recent Canada Food Price Report released Dec. 5 says the cost of groceries will increase another 5 to 7 percent on average next year. These are the highest increases in food prices in the last 12 years that the report has been produced.
“This year’s report predicts that a family of four, including a man (age 31–50), woman (age 31–50), boy (age 14–18), and girl (age 9–13) will pay up to $14,767.36 for food, an increase of up to $966.08 from the total annual cost in 2021,” said the report.
Food price increases in Alberta, British Columbia, Newfoundland and Labrador, Ontario, and Saskatchewan will likely be higher than the national average in 2022, while price increases in the remaining provinces will be lower.
Gas Costs
Besides food prices, Canadians are also worried about putting gas in their cars and trucks. Sixty-one percent of 1,005 adult Canadians surveyed Nov. 11–15 in the Ipsos poll commissioned by Global News said they were worried they may not be able to afford fuel for their vehicles.
Seventy-one percent were worried that interest rates will rise too fast, while 42 percent said they were worried about losing their jobs if the economy did not rebound.
Fifty-two percent of Canadians surveyed said they were worried they would be short of money to buy Christmas gifts, and 48 percent said they were worried about overspending during the holidays. Eighty-one percent of those surveyed were worried inflation was making everyday items less affordable.
A similar poll was carried out in October, and in just one month’s time, concern over almost all of these day-to-day economic concerns increased. For example, in October, less than half (48 percent) of those polled were worried about affording gasoline, and that rose 13 percent to 61 percent just one month later.
“Consistent with October 2022, women are significantly more likely than men to express concern over the majority of these items, including the potential for a recession (92 percent vs. 80 percent of men); economic troubles impacting retirement (72 percent vs. 62 percent of men); interest rates rising quicker than they can adjust (76 percent vs. 67 percent of men); getting in over their head with holiday spending (52 percent vs. 43 percent of men); and not having enough money to buy holiday gifts (56 percent vs. 48 percent),” said the poll.
Cutting Back
Younger people, at 68 percent of those polled, were more likely to feel concerned about affording the holidays and buying gifts, as were 65 percent of parents surveyed.
Ipsos has been tracking the extent that Canadians may be changing their spending habits and cutting back on non-essential items to cope with high inflation. Fifty-two percent of Canadians say they have reduced eating out.
Almost half, 46 percent, of those polled report reducing entertainment, 44 percent are buying less new clothing, and 31 percent are reducing their travel in Canada. Another 28 percent are reducing their travel outside the country.
Half of Canadians are looking at flyers and shopping for sales, while another 31 percent are using coupons to save money.
US Air Force Veteran Freed In Major Ukraine-Russia Prisoner Swap
The Ukrainian government on Wednesday announced the completion of a major prisoner swap with Russia which included an American citizen.
The swap resulted in the release of 64 Ukrainians and one US citizen, according to official statements. “64 soldiers of the Ukrainian Armed Forces who fought in the Donetsk and Luhansk sectors are going home,” chief of staff to the Ukrainian presidency, Andriy Yermak, said in a tweet.
The statement identified the freed American by name: “It was also possible to free a U.S. citizen who helped our people — Suedi Murekezi” – who is reportedly a Rawandan-born American that was working in a nightclub in Kherson city at the time the war started.
In a media interview immediately after his release, Murekezi described a situation wherein he became trapped in a war zone without a passport. He further says that he was tortured and accused of being a CIA agent:
A two-hour ceasefire was agreed to in the area, starting at midday local time, so that a swap involving dozens of prisoners of war could go ahead. Murekezi was brought out of Russian-controlled territory as part of that exchange.
Suedi had been arrested by the Russian-controlled authorities and spent weeks in a basement, where he said he was tortured. He also spent three months in a prison in Donetsk city. He was later released by the Russians, but he was without his U.S. passport and was effectively trapped in Russian-controlled territory, living in the main city of Donetsk.
The Washington Post has identified Murekezi as a US Air Force veteran. He had reportedly been detained in southern Ukraine at some point during the summer.
“A U.S. Air Force veteran captured by Russian forces in Ukraine earlier this year, has been released from occupied territory as a part of a prisoner swap between Moscow and Kyiv, a senior Ukrainian official and Murekezi’s family said Wednesday,” the Post reports.
There’s speculation over whether or not he was fighting with volunteer forces on behalf of Ukraine, given Ukrainian officials have been quick to “thank” him for “helping” Ukraine, as the statement from Zelensky’s office did. Murekezi’s family has denied that he was involved in the war or protests in any way.
Another POWs swap. 64 soldiers of the Armed Forces of Ukraine, who fought in the Donetsk and Luhansk areas, are going home.
Also, we managed to free a US citizen who helped our people – Suedi Murekezi. And we got home bodies of four KIAs. pic.twitter.com/qKqbGpwV6x
Russian state media has suggested Murekezi was arrested for attending “anti-Russian” protests in the Donbass:
Russia’s state-run TASS news agency reported that Murekezi was arrested in the eastern Donetsk region of Ukraine in June and charged with attending anti-Russian protests and inciting “ethnic hatred.”
But Murekezi’s family in Wednesday statements upon his release said that essentially he was “stuck” between changing occupation lines, but further that upon his release “he sounded good”.
Coast-To-Coast Winter Storm Sets Crosshairs On Northeast
A destructive storm traversing the US unleashed blizzard conditions across parts of the Great Plains, spawned deadly tornadoes in the South, and has the Northeast in its crosshairs later this week.
Eastern Wyoming, western South Dakota, western Nebraska, and southeastern Montana have blizzard warnings for the second day Wednesday.
To the south, the huge storm unleashed tornadoes in parts of Texas, Oklahoma, and Louisiana. Severe thunderstorms and tornadoes are possible across Louisiana to the Florida panhandle this afternoon. Much of the severe weather watch with moderate to high threat of tornadoes risk is from New Orleans to Gulfport to Mobile.
NEW: Today’s tornado threat in the South has grown and we now have a TOR:CON of 7 for some areas.
As for the final stop on its cross-country tour, which first began dumping heavy snow in the Sierra Nevadas last weekend, the storm will bring a mix of wintery weather from the central Appalachians up along the interior Northeast on Thursday into the weekend.
Winter weather advisories cover a large swath of the Mid-Atlantic and Northeast regions. Major metro areas, including Washington, D.C., Baltimore, and Philadelphia, have winter weather alerts posted for the next few days.
Much of the snowfall is expected west of the I-95 corridor and across central and northeastern Pennsylvania and upstate New York on Thursday, then Vermont, New Hampshire, and western Massachusetts by evening and late night.
Meanwhile, average temperatures across the Lower 48 are expected to dive well below average through Christmas.
This will boost heating demand and keep a bid under energy prices.
US natural gas storage flipped from injections to draws in Mid-Novemeber. Supplies will continue to dwindle on increasing heating demand and the Freeport LNG export terminal reopening.
US NatGas prices have been range bound between $5 and $7 since mid-Otcotber.
A couple more cold snaps could propel US NatGas prices over the $7 mark.
US senator Bernie Sanders on Tuesday agreed to withdraw the so-called ‘Yemen War Powers’ resolution from a planned vote on the senate floor, following intense lobbying against the bill by White House officials. “I’m not going to ask for a vote tonight … I look forward to working with the administration who is opposed to this resolution and see if we can come up with something that is strong and effective. If we do not, I will be back,” Sanders said on Tuesday night, alleging that he would enter negotiations with the White House on “compromise language.”
Sanders’ withdrawal of the crucial bill – which would have restricted US military involvement in Yemen and reasserted Congress’ war-making authority – and promise to “be back” comes mere weeks before democrats lose control of the House of Representatives.
With Republicans in complete control of the house, many believe the bill would have a much harder time passing a vote, given US lawmakers’ propensity to comply with the demands of influential Saudi, Emirati, and Israeli interests – all of whom benefit from the humanitarian crisis in Yemen.
Ahead of the expected vote on Tuesday, White House officials scrambled to persuade senators against curtailing Washington’s involvement in war-torn Yemen, highlighting that “significant hostilities have not yet resumed” and arguing that the peace resolution would actually mean war by claiming it “complicates diplomacy.”
Senators were also told that President Joe Biden’s aides would recommend a veto if the bill passed and that the administration was “strongly opposed” to it. On top of this, White House officials argued that the bill “could complicate the effort to back Ukraine in its war against Russia.”
“We’re in touch with members of Congress on this. Thanks to our diplomacy, which remains ongoing and delicate, the violence over nine months has effectively stopped,” White House Press Secretary Karine Jean-Pierre told reporters when pressed about Biden’s interest in keeping a strong US army presence in Yemen.
Yemeni resistance leaders have accused Washington of deliberately obstructing a comprehensive peace process between Sanaa and Riyadh, highlighting that the Saudi-led coalition, Israel, the US, the UK, and France have in recent months consolidated their military presence in southern Yemen and on the country’s islands.
“The US is trying to impede any sincere efforts to achieve sustainable peace in Yemen,” the Ansarallah resistance group warned in a statement last month.
Arabic media reports have revealed that the rift between Washington and Riyadh spilled over into their cooperation in Yemen, as the US now favors “interim solutions” rather than a comprehensive end to the war in order to maintain a “playing card” to use against Saudi leaders.
White House Press Secretary declines to comment on whether President Biden would veto Bernie Sanders’ Yemen war powers resolution following reporting by @ryangrim that the White House is urging Senators to vote against it: https://t.co/0yBrK4j42epic.twitter.com/8WO1X65K0i
Yemeni officials have also cautioned that US and French troops deployed in provinces controlled by the Saudi-led coalition have arrived to coordinate the looting of Yemen’s natural resources, similar to Washington’s oil trafficking operations in Syria.
Since 2015, Yemen has been suffering under a brutal Saudi-led war and economic blockade that has left close to 400,000 dead, displaced millions more, and destroyed the country’s infrastructure. On top of this, western NGOs have been accused of mishandling billions of dollars in humanitarian aid meant for Yemenis.
The White House’s latest pro-war scheme comes at a time when the Pentagon is expected to receive its highest annual budget ever, as defense spending in the US is on track to reach $1 trillion annually before the decade is out.
A Stunned Wall Street Reacts To The Unexpectedly Hawkish Fed
As the first kneejerk reactions to the final Fed statement of 2022 come in, the consensus is clear: after the recent Brookings comments from Powell and yesterday’s CPI miss, few expected the Fed to come out as guns blazing hawkish, as it did, despite shaving off 25bps from it recent 75bps rate hikes (largely the result of the sharp easing in financial conditions over the past two months which the Fed is clearly unhappy with).
The market’s reaction was swift, pushing both terminal rate expectations higher and hawkishly adjusting rate-cut expectations…
Which put together sent the USD higher, while bonds, stocks, and gold all fell in price…
Below are some of the reactions we have gathered so far. We will update this as more come in:
Neil Dutta, head of economics at Renaissance Macro
“A Hawkish Fed. The FOMC Statement statement is notable for how little it has changed from the prior meeting. This remains a hawkish Fed.”
George Concalves, macro strategy at MUFG Securities Americas
“As close to a recession call from the Fed as I can ever recall from SEP forecasts while holding rates at multi-decade highs, this is a Fed that wants to make sure the inflation job is done and won’t relent that quickly. The selloff in Treasuries is a market realizing they were in the wrong Zip code on expectations — they are hiking and market still wasn’t taking it serious. The clustering of dots for 2023 above 5%, with only two below that level, shows an FOMC on the same page to get the job done. They are going until something breaks in the economy, markets or both to get at aggregate demand and reduce wages and cut off the potential for a wage-price spiral, they are not taking chances.”
John Brady, RJ O’Brien
“Hawkish revisions to the inflation forecast with a majority of FOMC participants seeing core PCE decelerating to 3.5% at the end of 2023, versus a projection of 3.1% in the September forecast round.”
Ian Lyngen, BMO Capital Markets
“Using a very approximate fair value calculation for 2-year yields, with a 50bp hike in February and a final 25 bp hike in March, and a 25 bp cut in March 2024 followed by an aggregate 75 bp in additional cuts over H2 ‘24 (meshing with the dotplot), we see 2s as ‘fair’ at 4.69%. Certainly not precise, but context for how far the rally in the front end had run ahead of the meeting.”
Katherine Judge, economist at CIBC Capital Markets:
“The inflation forecast was upgraded for 2023-24, so any good news on the inflation front ahead could cause policymakers to hike by less than shown in these projections.”
Ira Jersey, Bloomberg Intelligence
“The hawkish statement takes back some of Powell’s perceived dovishness at his recent speech. This was not surprising to us, and we think it suggests the recent steepening of the yield curve could once again head toward new cycle lows before the end of hikes. However, I think the market will be cautious before the press conference, where in recent quarters the rates market has seen the bulk of its Fed-meeting-day moves.”
Watch Live: Will Fed Chair Powell Be Grinch Or Santa?
November’s dovish ‘Dr. Jekyll’ FOMC statement was met with Fed Chair Powell’s ‘Mr. Hyde’ hawkish hammering which leaves everyone wondering – after today’s hawkish FOMC statement, will Powell punish the pessimists this time?
We suspect he certainly is not happy that despite 225bps of rate-hikes, financial conditions remain ‘easy’ – not exactly the ‘choking’ he had hoped for…
Investors are wondering if Powell delivers Jackson Hole (SPX -3.4%) or more like Brookings/Nov 30 (SPX +3.1%).
It may be the case that Powell focuses on the length of time Fed Funds will remain elevated rather than pace or level.
One wonders if Powell will be uber-hawkish in an effort to ‘break’ something which will then give him an opportunity to ‘pause’ his inflation-fighting policies without embarrassing himself and removing the last leg of credibility and independence that the central bank has.
FOMC Hikes By 50bps, Hawkishly Signals Rates Will Go Higher-For-Longer
Tl;dr: Fed hiked rates by 50bps as expected but signaled, through its projections, that it will hike rates higher than the market expects and hold those rates higher for longer. Furthermore, the projections for economic growth, employment, and inflation all suggest The Fed expects a recession.
Fed rate expectations are notably more hawkish than the market’s…
With the market expecting rates to be lower than current levels by January 2024…
* * *
Since the November 2nd (dovish) FOMC statement and (hawkish) press conference chaos, gold and bonds have dramatically outperformed, stock have rallied as the dollar and crypto tumbled…
Source: Bloomberg
Most notably, despite Powell’s extremely hawkish press conference (which sent rate-hike expectations higher), the overall expectations of the trajectory of Fed rate has dived dovishly since the last FOMC. Note the terminal rate has dived from 5.20% to below 4.80%…
Source: Bloomberg
This has completely decoupled the market from The Fed’s dot-plot expectations for the rate-trajectory from here (with the market considerably more dovish)…
Source: Bloomberg
Note we will get a new dotplot today.
The market is pricing in around 6 rate-cuts from mid-2023 to end-2024…
Source: Bloomberg
Finally, and perhaps most importantly for Powell, we note that financial conditions have eased dramatically since the last FOMC, now at their ‘easiest’ since June (225bps of rate-hikes ago!)…
Source: Bloomberg
The market has fully priced-in a 50bps hike today but since the CPI print, February and March expectations have dovishly dropped (27% odds of 50bps in Feb and 48% of 25bps hike in March)…
Source: Bloomberg
So, the primary points of uncertainty are:
(i) how high DOTS move, 25bps – 50bps. Bond markets are pricing a ~4.8% terminal rate effectively achieved at the March 2023 FOMC meeting
(ii) the degree of hawkishness of Powell’s press conference. Investors are wondering if Powell delivers Jackson Hole (SPX -3.4%) or more like Brookings/Nov 30 (SPX +3.1%). It may be the case that Powell focuses on the length of time Fed Funds will remain elevated rather than pace or level.
So what did the FOMC say?
The Fed hiked rates by 50bps as expected, adding that “ongoing” rate-hikes are likely anticipated.
And even more hawkishly, The Fed’s new dotplot signals a median forecast of 5.1% in 2023 (more hawkish than expected), dropping to 4.1% in 2024. Additionally note that one Fed member expects 5.50-5.75% in 2025!
Which is even more hawkishly decoupled from the market’s dovish expectations…
While we had a unanimous vote today, there’s clearly a whole lot of division over expectations for policy in 2023.
With 7 of the 19 forecasters seeing a policy rate of above 5.25% next year, that’s a sizable minority.
The 2023 Median ‘Dot’ continues to hawkishly rise, decoupling from the market…
Fed projections see weaker economy in 2023; higher unemployment rates, more inflation and 50bps higher Fed funds rate.
Notably, a majority of FOMC participants now see core PCE decelerating to 3.5% at the end of 2023, significantly higher than the projection of 3.1% in the September forecast round.
Somebody is going to have to fold here…
As Bloomberg’s Chris Anstey notes, looking at the median forecasts for economic growth and the jobless rate, Fed policymakers are basically predicting a recession.
A 0.5% gain for GDP in the fourth quarter of next year compared with the current quarter could easily incorporate two or three quarters of contraction.
And the jobless rate rising by almost 1 percentage point — that’s an outlook that is pretty consistent with a recession.
So Powell may say they’re still hoping for a softish landing. But basically the Fed is projecting a recession.
Now all eyes and ears are on Powell to see if he flips the script once again.
Read the full Redline of the statement below (virtually unchanged):
