April 27, 2016

Could see slowdown in auto productions

Industrial production has fallen to its worst level since February 2014. Weakness in mining, machinery and oil and gas are certainly the main catalysts, but now we might also have a slowdown in auto production.

I think that with the automotive industry's large dependence on consumer credit, we can forget about another Federal Reserve rate hike this year if auto sales continue to moderate."

Short F, GM

April 25, 2016

Stock prices decoupling from real economy

Our markets are no longer controlled by passionate players who trade or invest in brilliant entrepreneurs, superior company managements and emerging growth companies. Instead, they're too often controlled by forces like gamma trading and risk-parity strategies.

So has the absence of natural price discovery in the stock market, which no longer resembles a pure reflection of the real U.S. economy.

Many of us who have made our living using natural price discovery on the long side and exploiting frauds and questionable accounting practices on the short side are growing more and more uncomfortable.

Of course, betting that ploys from the world's central bankers will eventually blow up and produce worldwide pain is one option. That outcome seems ever more likely as our monetary authorities try to defer the pain by moving "all in." But predicting when such a meltdown will occur remains difficult.

Consider yesterday's stock-market action, which was importantly influenced by speeches made by two Federal Reserve "rally boosters" during the trading day. New York Fed President William Dudley and Minneapolis Fed President Neel Kashkari both voiced support for gradualism in U.S. rate hikes.

Stocks focused on that and again ignored fundamentals like the steepest, most-consistent slide in profits since the 2008 financial crisis. Price-to-earnings ratios rose close to levels not seen in some six years, while futures are trending even higher this morning -- putting a new all-time-high for stocks in sight.

Personally, I'm disaffected with the entire market mechanism. It was once the driver of capitalism, serving as a freely floating market that was influenced by the winds of economic change. It was gently guided by central-bank policy at times, but not so muddied that its dirty water looked like a black hole of uncertainty.

Compare that to today's disproportionate role of gamma trading, risk-parity strategies and other quant activities. Amid an absence of natural price discovery, the market all too often serves as a trap for traders and investors who rely on fundamentals and technicals.

Now you might ask that if the current degree of monetary intervention is the "new normal" and an apparently healthy situation without adverse consequences, what's the problem?

Answer: This situation isn't without adverse repercussions. The market's margin of safety is disappearing and stocks are decoupling ever further from the real economy.

Instead, it seems like we're simply flying at "ludicrous speed" further and further into today's Bizarro Investment World.

Position: Long SDS (large), Short SPY

Originally on thestreet.com

April 21, 2016

Doug Kass admits BGB was a poor investment

I originally purchased Blackstone/GSO Strategic Credit Fund (BGB)  11 months ago last June in the belief that widening junk bond spreads would stabilize soon.

I was premature, as spreads continued to widen out throughout the rest of 2015. By early 2016, and with commodities prices near their lows, the spreads were so wide that they were statistically discounting a rather deep recession. At that time, Carl Icahn and many others were warning that an imminent collapse in the high-yield bond market would lead to economic catastrophe. At that time I defended my position in the belief that they were wrong, both here and here.

In my 15 Surprises for 2016, I expressed the view that the high-yield bond market would be among the best asset classes for the year. BGB's year-to-date performance is up 5.5% and I still believe in this case.

As recently as late January, I defended my position on the junk bond and senior bank loan sectors. BGB's shares steadily declined and bottomed out at approximately $12 a share in mid-February.

Since June 2015, and adjusted for its generous divided of 10.5 cents per month, BGB has fallen from about $15 to $13.90 -- a drop of about 7%. In other words, this has been a poor investment. The one-year return has been a negative 6.9%.

BGB has rallied by about 15% from the February lows, during which iShares iBoxx High Yield Corporate Bond ETF  (HYG)  rose from $76 to nearly $83. Its year-to-date gain has been 5.5%, and its six-month gain is 8.5%.

BGB is trading at a 9.7% discount to its Net Asset Value. This compares to a three-year average of -9.2%, a 12-month average of -12.95% and a six-month average discount of -12.45%.

The current distribution rate is approximately 9%. (At its low in February, BGB was yielding 10.5%).

I have averaged all the way down in BGB over the last 11 months and I now have only a slight loss (net of dividends) in the ETF position.

It clearly has not been worth the effort since June!

Importantly, this note is an acknowledgement of a poorly timed entry point, and the move I have taken is in recognition of the strong recovery in the price of the shares since the February lows coupled with renewed macroeconomic risks.

With the price of most commodities particularly of an oil-kind rising rapidly since January, a still-elevated 9% yield and only a 1.5-year portfolio duration, BGB continues to represent good long-term value. However, given my overall negative market and economic outlooks, I can no longer rationalize having an outsize position for the following reasons:

-   The shares have rallied sharply (15%) from the 2016 lows. This has reduced the reward versus risk. My guess is that the upside/downside is basically even over the balance of the year, with  $1 upside and $1 downside in BGB shares. 
-   The current discount (9.70%) to Net Asset Value is closing in on the three-year average (9.20%) after rising to as high as 15% two months ago, when the markets were in panic mode. Given continued global economic downgrades, it is not likely that the discount will contract further throughout the balance of 2016.
-    The current dividend yield of 9.0% is down from 10.5% in February. This is still an attractive return, but given the leverage of 32%, it is not an unusually attractive return anymore.
-    As mentioned previously, global economic growth expectations continue to be ratcheted down, and I am getting increasingly negative on the prospective trajectory in 2015-2017.
-    I have increased my short net equity exposure, and if I am correct in view, the junk bond and senior loan markets will not likely be spared. I am battening down the hatches and I want to further reduce my risk exposures.
-    My one-third probability associated with a garden-variety recession may be too low, particularly if an exogenous event interrupts the current modest rate of domestic growth. 

This is another difficult investment decision for me, but reflecting the above I have reduced the size of my BGB holdings from large to medium over the last two days. I plan to reduce the size of my BGB further in the week ahead.

Position: Long BG

April 20, 2016

Anticipatory trading vs Reactive trading

My negative market view is diametrically opposed to the positive market action that we've been seeing lately. But as most readers know, I'm both a fundamentally based investor and anticipatory rather than reactive.

Of course, I recognize the potential short-term risks and liabilities to such an approach -- something my Real Money Pro colleague James "Rev Shark" DePorre (a reactive investor) often writes about. I also fully respect different fundamental and technical approaches, such as Rev Shark's disciplined message and strategy.  

That said, I'd like to respectfully comment on Rev's opening column from this morning, which reads in part:
"Market players often try too hard to gain an edge. They slice, dice and dissect the action and come up with reasons why this or that is about to happen. It is understandable, since in most endeavors clever thinking and brilliant insight tend to produce positive results.
In the stock market, it often pays to not think too hard. Sometimes, the obvious is the best course of action. It can be as simple as respecting the fact that the market has positive momentum.
Action like we had yesterday, when we broke out of a trading range and traded steadily higher, seems to attract large crowds of market players that want to find reasons to fight the action. They roll out the macro arguments about oil, currencies, central bankers, slow economic growth and so on. None of those things mattered lately, but they provide a very convenient basis for those who want to question the action ...
The funny thing about the market is that the smartest people can think themselves out of trades. Instead of just doing what is obvious, they try too hard to be clever and end up quite frustrated, as the market continues to act in an obstinate and unthinking manner.
Right now, the technical pattern of the market is painfully obvious. We have been basing for a couple of weeks and broke out to the upside. ...
Don't be afraid of the obvious. The bulls have the edge after the action of the last couple of weeks. There may be some further consolidation and even pullbacks, but the trend is obvious. The bears will be out in full force, talking about earnings, the slow economy, the central bankers, the bounce in the dollar and a variety of other negatives. But sometimes momentum is just momentum."  - James "Rev Shark" DePorre, 
Now it's true that sometimes a cigar is just a cigar, as Freud once famously said. But as I expressed it my opening missive today (as well as throughout the past year), I believe the current rally isn't a bull market. Rather, I think it's just part of a topping-out process that began last spring. And as was the case with stocks' four previous rallies of off their lows, I believe the market's latest move higher is destined to ultimately fail.

Indeed, I and others see many similarities between Spring 2016 and Autumn 2007 in terms of the accumulation of debt. That's one of the reasons why I've concluded that stocks' risk-vs.-reward ratio is particularly unfavorable now. It's also why I'm acting in an anticipatory manner and averaging up in my short sales.

For now the bulls seem to be having themselves a good victory cigar. But from my perch, their stogies look close to burning out.

via www.thestreet.com/story/13531601/1/blackstone-gso-and-ishares-iboxx-doug-kass-views.html

April 18, 2016

Hedge Fund industry facing tough times

Peak Hedge Funds" has become another of The Many Peaks I See. At the minimum, I think that hedge funds' market dominance is over, and that a diminished role for this asset class could prove destabilizing for stocks. And at most, I believe that hedge funds' maturing life cycles and falling influence could have major impacts on markets in 2016-17.

Stocks' recent "rally of laggards" represents just the latest threat to the hedge-fund industry, which has continued to underperform the broad market. Tough redemption rules will buffer the blow for now. But I believe this key category will face a continued contraction in existing funds' size, coupled with the steady death of many smaller funds (and even some larger ones). 

Here 10 reasons I see as to why hedge funds are in trouble:

1.    Poor Investment Performance. Concentrated hedge-fund bets in underperforming, wrong-footed investments like Allergan, Sun Edison, Valeant Pharmaceuticals and the energy sector have become commonplace -- and in many cases, spectacularly unsuccessful. Bill Ackman's Pershing Square Fund is a vivid and recent example.

2.    Big Bets Have Downsides. Brokerages and other financial institutions take an accounting "haircut" for concentrated portfolio positions, but hedge funds don't. Instead, they mark their asset prices to the last sale. This aggressive accounting method is an untold industry secret that can easily backfire if positions sour. While Carl Icahn has very little public money in his fund, just look at his concentrated portfolio. The lesson here: Selectivity can work both ways.

3.    Little Liquidity. Investors have begun to recognize that a lack of liquidity typically accompanies concentrated investment portfolios. The 2010 Dodd-Frank law has dismembered the brokerage industry's role as liquidity source.

4.  High Fees. Given the sector's disappointing performance over the past several years, hedge-fund fees are simply too high to justify institutional or high-net-worth inflows. Funds will likely lower fees going forward, but that could change the industry's texture and composition.

5.    Size (and Success) Matter. Many high-profile funds are beginning to recognize that their portfolio sizes -- and the artificiality of markets dominated by quant strategies and central-bank policies -- make delivering superior investment returns difficult. And many are led by very wealthy individuals who are starting wonder why they should even try. Some of these executives are losing the "fire in the belly," closing up shop or returning capital to investors and becoming family offices that simply manage their own investments.

6.    Larger Funds Don't Have Flexibility. The market has seen a violent rotation into cyclical and industrial stocks over the past six weeks, but few if any large hedge funds played this aggressively. They're simply too large or not flexible enough to do so.

7.    Funds Can't Handle a Sustained Downturn. Should stocks ever correct and stay low, large high-profile funds will be unable to participate. They're simply too big and inflexible. Some have even abandoned their short-selling strategies and personnel in the recognition that shorts can't provide an effective hedge for such big portfolios. Borrowing costs have risen and the number of "hard-to-borrow" shorts has increased.

8.    The 'Billions Effect' Weighs on the Industry. Like the players in Showtime's series Billions, some hedge funds might have walked on the edge of the law and could face investigations by authorities. This could further damage the industry's reputation and ability to attract inflows (if not worse).

9.    Political Considerations. The growing schism between America's "haves" and "have nots" has focused politicians' attention on billionaire hedge hoggers, many of whom have been a little too conspicuous in their consumption. Although many of these people are also extremely charitable, continued political focus could further jeopardize the industry's popularity among institutional investors.

10.    Carried-Interest Tax Issues. As an addendum to the point above, the generous tax treatment that hedge-fund executives currently enjoy on carried interest will likely continue to face serious targeting by politicians. This will make the industry less profitable to its principals and employees, again risking a changing risk-vs.-rewards texture to fund ownership.

The Bottom Line
I'm not predicting the hedge-fund industry's death, which has been forecast on numerous occasions in the past. I'm just predicting that tough times lie ahead.

But I'm unsure who wins if the industry's woes continue. Wall Street is a zero-sum game and money that exits hedge funds has to go somewhere (although risk aversion could change that). My guess is that the machines, algorithms and other quant-fund strategies could benefit, increasing their already-outsized market role and dominance -- and creating even more market volatility and potential disruptions.

Either way, the bottom line is that due to the threats above, I think the outlook for traditional, ol' fashioned stock-picking hedge funds seems problematic for at least the next year or two.

via thestreet

April 13, 2016

Everyone talking on TV pretend to buy the lows and sell the highs

As I have written, buyers live higher and sellers live lower. But the fact of the matter is that few -- with the exception of Jimmy [Cramer], who did add stocks to his portfolio when stocks sold off and a small handful of others -- capitalized materially from the January/February swoon. Most were immobilized as they delivered a Cassandra-like message at the time of market weakness in early 2016.

As I wrote in mid-February -- about four days after the bottom -- when I was buying stocks, "Contrarian view on why markets could rally."

Most of the talking heads in the business media are filled with hubris (perhaps associated with virtual portfolios and/or the need to attract an audience) and seem always right in their decision making, as they are filled with snarky "I told you so's," "Of course I bought the lows," etc.

But they told no one -- certainly not to us -- on their platforms in the business media when stocks fell hard earlier in the year. Instead, they now feign past optimism and opportunism, though they are allies of neither (until recently).

As for me, I profited and made mistakes -- most transparently! I bought both the January and February lows at a time that many declared a "Bear Market," but sold into the subsequent rallies and shorted prematurely.

Stated simply, there are too many Fugazis out there who seem to have the need to create the impression that they never made an investment mistake and who never missed taking advantage of a dip to buy or a rip to sell. It is truly pathetic that these jokers think their audiences even believe their unparalleled and consistent string of successful trades and investments.

And I am very glad the Masters Tournament approaches us in a few days so I can switch the channel, because there are far too many Fugazis, liars and scoundrels crowding the airways these days.

Do they not think we have been listening?

via thestreet.com/story/13524743/1/allergan-tesla-and-ishares-nasdaq-biotechnology-doug-kass-views.html

April 11, 2016

Doug Kass adding more net-short positions

It looks from my perch like global equity markets have sharply decoupled from both fundamentals and the real economy. What's even more surprising to me is the growing acceptance of that divergence, with financial-asset prices rising even as economic headwinds multiply.

The stock market's major indices have advanced rapidly from their February lows despite slightly less than 1% average U.S. real gross-domestic-product growth rates over the past six months, coupled with four straight quarters of negative S&P 500 earnings comparisons.

Meanwhile, the three factors that have contributed to profit-margin growth -- low interest rates, low effective corporate-tax rates and nonexistent wage gains --seem destined to bottom out and reverse.

Many investors see the U.S. dollar's drop as an important factor in emboldening the bulls (or at least as a partial explanation). But it's important to appreciate that the dollar hit a 14-year high not that long ago, so we have to put the greenback's recent weakness into perspective.

Other countries economies are getting worse too

The Nikkei 225's modest rise overnight in Japan snapped seven straight sessions of declines, which had been the index's longest losing streak since November 2012 [Abe's "Abenomics" started].

The recent declines have been due to the apparent failure of Japan's easy monetary policies. As I feared, negative interest rates are strangling the Asian nation's aging population. Consumers are hoarding cash and personal consumption is plummeting (a motion picture that may be coming soon to a theater near you).

Meanwhile, Europe's Euro STOXX Bank Index has declined for the 15th session in the past 17 and is 18% below its March high -- a fact ignored by many U.S. investors.

Other Factors

There are no doubt other factors at work that are providing catalysts to the U.S. stock market's recent rally.

For example, gamma trading, risk parity and other quant strategies are probably all goosing and chasing stock prices. That's in the "DNA" of those strategies and their accompanying algorithms.

It might also help that many hedge funds have suffered mightily from adverse stock selection. so they've "de-risked" and have found themselves forced back onto the long side.

The Bottom Line

We're currently in "Bizarro World" in many ways, with the irrational increasingly being rationalized on Wall Street.

Yesterday's failed merger between Pfizer (PFE) and Allergan (AGN) is but one example. In true Bizarro fashion, Allergan's CEO went on business TV yesterday to say that the U.S. Treasury's anti-merger decision was "un-American." But arguably, the only un-American thing about the deal was Allergan's exploitation of a U.S. tax loophole by putting its corporate headquarters in the tax haven of Ireland.

Meanwhile, the market's technical situation remains unclear.

I think it's also worth noting that the ratio of bears in this week's AAII Investor Sentiment Survey has fallen to its lowest level -- 21.5% -- since early December after peaking at 48.7% amid February's market bottom. Bulls have risen to 32.2% (up five percentage points) as renewed investor optimism has accompanied higher stock prices.

The "bull market in complacency" is obviously alive and well, returning with gusto over the last 1-1/2 months. But market optimism in the face of flailing fundamentals is something that Wall Street more typically sees at or near a market top than a market bottom.

That's why I've used stocks' recent strength as an opportunity to add to my short book, and why I'm now at my maximum net-short exposure. I'm sticking to my view that the market made an important, broad top in May 2015.

At best, I see an unattractive risk-vs.-reward ratio from here, in which downside risk substantially exceeds upside opportunities.

And at worst, I see a potential repeat of the 2007-09 financial crisis, although the players (public sector vs. private sector) will have changed.

It might appear that the strategy of chasing stocks isn't so wacky, as The Madness of Crowds has returned. But to me, the wacky thing is the market's advance itself -- which seems to have the weakest of foundations.

The bottom line is that I see stocks' recent gains as nothing more than a bear-market rally. And I believe that many who worship at The Church of What's Happening Now might have to find religion elsewhere over the balance of 2016.

via realclearmarkets

April 8, 2016

Shorting life insurance companies could be a good bet

The sectors that I like on the short side would be the life insurance sector where the reinvestment challenges are profound in a lower-for-longer interest-rate environment.

via Bloomberg

April 7, 2016

Feds policies are hurting savers and helping risk those who need cheap money

My portfolio is now at its largest net short exposure in over a year.

In doing so, I am at odds with The Church of What's Happening Now. I'm also at odds with many of our technically oriented contributors (even as I am respectful of their views and methodology) who react to price trends over fundamental analysis, although some do combine the two!

I recognize the risks of being anticipatory and outside of the herd/crowd. However, being so -- for example, as in 2007-08 -- has served me well. Like nine years ago, my time frame, considering the depth of my fundamental concerns, has been lengthened in duration.

It is logic of argument, the determination of reward versus risk by incorporating fundamentals, valuations and investor sentiment, and the broader financial analysis of the world's economy that guides my investment journey.

Importantly, I see many similarities between that period and today with regard to the build-up of public debt (compared to the last cycle, where debt was concentrated in the private sector.) A nasty recession, somewhat worse than a garden-variety recession, might be the outcome.

From my perch, Yellen's comments resolved nothing as, again, it is not the absence of liquidity, the cost of capital or the level of interest rates that are constraints to growth, as I stated here and here. Rather, lingering -- and some unintended -- structural issues will weigh on the future trajectory of global economic growth.

I find it downright scary that after six to seven years of zero interest rate policy and quantitative easing, Fed talking heads such as Charles Evans say on one hand the economy is fine but, on the other hand, that moving interest rates by 25 to 50 basis points could jeopardize growth. That statement underscores the fragility of a recovery that is vulnerable to any number of exogenous events.

And by rewarding those individuals and entities that don't need cheap money while disadvantaging those who have spent a lifetime saving makes little sense to me and is likely a recipe for long-term failure and potential social issues and threats.

Monetary policy will not induce real growth as would debt reduction, true tax reform and structural changes to our entitlement system. Being fiscally responsible to our representatives in Washington, D.C., seems to be a revolutionary concept, but it really is the responsible thing to do.

I am not even certain that a rise in interest rate will be contained, or, as the consensus now believes, that rates will move lower. Already the "markets" have rescinded the drop in yields that were spurred by Yellen's comments.

The same applies to the consensus that the U.S. dollar will now weaken; I am less certain than most seem to be.

I see Fire and Ice and I am haunted by the answers to the three questions that I ask myself every morning before the market opens as well as The Many Peaks I See.

So I am committed to the short side...

Position: Short SPY 

via thestreet

April 5, 2016

How following the crowd can lead to losses

Buyers live higher and sellers live lower. This applies to human beings as well as machines.

Remember, the crowded trade was long the U.S. dollar three months ago (it didn't work out well). The crowded trade today is short the U.S. dollar.

Remember, the crowded trade was short the S&P 500 in January. The crowded trade today is to be long the S&P, which is up more than 240 points above the level of two-and-a-half months ago, and on the side of the Fed and the world's central bankers.

Extreme and crowded views often don't pay off.

I remain at the largest net short exposure in more than 12 months based on a fundamental view that global economic growth is imperiled, among other reasons.

And Wharton's Dr. Jeremy Siegel is bullish for 2016-17. Phew!

via thestreet.com/story/13513572/1/lessons-learned-again-madness-of-crowds-yellens-non-event-best-of-kass.html

April 4, 2016

Bulls could be their last laugh for this economic cycle

Stocks celebrated Federal Reserve chair Janet Yellen's dovish comments and the party has been continuing. However:

-    As I suggested months ago in my "2016 Surprise List" , it seems unlikely to me that there will be any Fed hikes this year (especially given the global economic slowdown). Not only that, rate hikes in coming years appear likely to come more slowly than the Wall Street consensus anticipates.
-    Yellen contended that the Fed has "considerable scope" for stimulus, although I can't see where any potency lies.
-    The central-bank chief said her definition of full unemployment might be lower than previously thought, and that the U.S. inflation outlook is more uncertain.
-    She also continued to expand her definition of the Fed's "data dependency." It now apparently includes the Chinese Purchasing Managers Index, European Union Industrial Production, South American currency rates and, of course, global stock and credit markets' health. 
-    The Fed chair said that "economic and financial conditions remain less favorable than they did back at the December FOMC meeting." She also frequently used the word "global."
-    Yellen also said "movements in bond yields act to buffer the economy from shocks, serving as an automatic stabilizer."
-    Lastly, she stated that a further drop in oil is bad for the global economy.

Overall, I believe yesterday's speech contradicted recent comments by several Fed regional presidents -- and underscored the central bank's documented poor forecasting skills. The Fed's economic projections (even those of the last two months) have continued to be wide off of the mark when the actual figures later come in.

I think Yellen's remarks also serves as proof-positive that the Fed lives in constant fear of a fall in capital markets and the likely negative-wealth consequences that would entail. (And to me, that fear is certainly justified.)

History Might Provide an Ugly Precedent

However, the last time the Fed moved from tightening to dovishness was back at the end of 2007, and we all know how that ended -- badly.

This time around, I believe that Yellen is attempting to sustain the economy's misallocation of capital but will end up giving us a "gift" of stagflation in the future (perhaps in the not too distant future).

In fact, the only thing that surprised me after Yellen's speech was the market's bold and constructive reaction to it.

Saxo Bank Chief Economist Steen Jakobsen captures my thoughts and concerns perfectly. Jakobsen told CNBC that he believes that the "social contract" between the rulers and the ruled has been broken.

In a recent research note, he wrote that the ratio between U.S. employee compensation and gross domestic product is the lowest in history even as corporate profits are at their highest point ever, according to CNBC. Jakobsen sees this as a key reason why so many voters want anything but the status quo.

He also told CNBC that the antipathy toward how the world's central banks are handling the economy also reflects a break in the social contract.
"We have glorified central bankers in the world today who have behaved like rock stars," the economist said. "Some of them, like [European Central Bank President Mario] Draghi, clearly enjoy being in the limelight. But the effect of what they do, the marginal impact of what they do, is deteriorating -- and massively so."

That's why I personally remain bearish. I'm fading the positive response to Yellen's speech.

To this observer, the combination of a bullish stock market and a bearish global economy doesn't add up after seven years of monetary easing that failed to address structural issues.

Besides the elevation of financial asset prices, there's been absolutely no evidence that I've seen over the past two years of the Fed's quantitative easing and 0% interest rates having any direct, positive influence on U.S. economic growth.

The cost of money isn't a material constraint on economic activity, so I don't believe that keeping rates lower for longer will have any important impact. Instead, I think stocks are rising mostly thanks to The Church of What's Happening Now.

Of course, many others feel differently. Just check out today's columns from my Real Money Pro colleagues "Rev Shark" and Jim Cramer. They see Yellen's strategy as a profit panacea and a "green Light" for stocks.

But I see many "peaks" out there -- in stock prices, profit margins, market breadth, housing, autos, commercial real estate, buybacks, M&A, China, Apple and more. And to me, nothing Yellen said yesterday changed any of that.

The bulls are getting the last laugh for now, but it might literally be their last laugh of this cycle. To me, the global economic glass is still half empty and promises not to change in the year ahead -- even in the face of a dovish Fed stance.

via thestreet