ATLANTA Q3 GDP NOW at 1.9% vs EARLIEST ESTIMATE AT 3.8%. SO WILL THE FED RAISE RATE?

During Q2, we have a lot of Fed member saying that June was live for a possible rate hike but that did not happen. Then we have a series of Fed speaks saying that the Q3 GDP could be more than 3% and September was live for a possible rate hike. Of course we all know the answer for the last two meetings. So after the most recent FOMC meeting in September, we have yet again another barrage of Fed speaks talking about hiking interest rates to talk up the US$.

For goodness sake, just like the freaking 0.25% and be done with instead of talking abut it quarter after quarter.

But will the Fed do so? The Atlanta GDP now is forecasting a misery 1.9% GDP vs an earlier estimate at 3.8%, that's shaving off 50% of the original forecast.

With Q4 being a weak quarter we could likely see the US GDP growing about 1% for the whole of 2016. And the Fed is saying everything is awesome with the economy to warrant yet another rate hike?

Just as they talk up the US$, China continue sot allow the Yuan to depreciate, in fact the most since September 2010 (source: Zerohedge). Since October 1 the USD/CNY has depreciated from 6.67 to 6.76. So China is sending a message to the Fed, you talk up the US$ up, we allow the CNY to go down further. We remember how it ended the last time in July 2015 and Janaury 2016 when the PBOC devalues the CNY.

Source: Zerohedge




I often see the retail indicators as the earliest sign of a recession because that's where people normally spend their extra income. Here's what we know:

1) Car manufacturers are reporting falling sales with Ford intending to idle 4 plants due to rising inventories

And by the way, ere's the truck sales report. It is in the level reminiscent of previous recessions.

Source: King World News


2) Major retailers are shutting hundreds of stores nationwide amidst deplorable sales revenue. I first wrote about this HERE

Since then the situation has gotten worse and more retailers have announced closing even more stores, including Gap (75 Navy and BP stores), American Eagle (150 stores over 3 years), Office Depot (400 stores) and many more. Aeropostale , too has recently declared bankruptcy.

3) Sales from restaurants are declining as more full time jobs are lost, more college grads unable to find jobs while being laden with debt.

Source: King World News




So recent consumer confidence has fallen, which means that the situation can only get worse. Indicators are pointing that we are heading towards a recession if we are not already there.

This time it will be worse than ever before due to the lack of tools by the Fed, but there's always a potential for a massive QE by the Fed in the horizon.

The above is just my opinion.