Excerpts:
The Federal Reserve Stays Dovish The 'Move' Is About Keeping Its Balance Sheet Loaded With Assets, Not About Letting The Assets Mature & Shrinking Its Balance Sheet The Federal Reserve announced that it will make available more than $2 trillion of U.S. Treasuries of its balance sheet assets to ensure the tool it uses to raise the interest rates operates in a smooth manner .. at first a raise in interest rates would appear to be hawkish .. but as former Federal Reserve advisor Danielle DiMartino Booth* explains, it is actually dovish because it allows the Federal Reserve to reinvest into its balance sheet the maturing assets that are leaving its balance sheet .. viola! .. the Federal Reserve is staying dovish .. "What if it really is all about reinvestment and not one teensy quarter-point rate hike? Over the next three years, some $1.1 trillion in Treasurys could roll off the Fed's balance sheet if reinvestments were to cease. Tack on the potential for mortgage backed securities (MBS) to prepay and/or mature and you're contemplating a figure that approaches $2 trillion. Make no mistake, shrinkage of the Fed's balance sheet to half its current size is much more feared by market participants than a slight tick-up in interest rates. Taking the step to not reinvest would increase the supply of Treasurys and MBS available to investors and reduce the Fed's support of the economy. The higher the supply on the market, the lower the price and hence, higher the yield, which moves opposite price." .. the European Central Bank (ECB) move in early December was also a similar move.
LINK HERE to the essay
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Federal Reserve Raises Rates Only To Save 'Face' "Whats the purpose of raising rates today with all these indicators weaker than 3 months ago. The Federal Reserve gave the reason for not raising rates then because of weak data .. The Federal Reserve is raising rates because they promised they would do so in 2015, and they can not fail one more time to to deliver on the type of rhetoric they have given while maintaining credibility."
- DoubleLine Capital Co-Founder & CEO Jeffrey Gundlach
Janet Yellen: "The era of extraordinary accommodation has ended."
Jeff Gundlach: it's another Bush-style "Mission Accomplished" moment.
LINK HERE to the reference
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James Grant*: Interest Rates Will Return To 0 Grant weighs in on the Federal Reserve decision to hike rates .. explains how very low interest rates have caused demand to push forward in time & are prolonging inefficient businesses to remain functioning into the future .. 5 minutes
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Will Austria Start Another Great Depression? 
LINK HERE to the essay
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Richard Fisher: Key Test For The Federal Reserve On Rate Hike Richard Fisher, Former Dallas Fed President, weighs in on the Federal Reserve's decision to hike interest rates .. emphasizes that this will be a key test of the Federal Reserve's reverse repo facility - this will be the key operating tool to keep the Federal Reserve funds rate at the target rate it has announced - LINK HERE for more info on this
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Danielle DiMartino Booth* On The Federal Reserve Awakens, But Watch Their Balance Sheet Boom Bu$t .. Discussion with Danielle's focus on reverse repos & the Federal Reserve's balance sheet instead of the hike. She thinks the Federal Reserve is late to hike & could be forced to keep its balance sheet at its present gargantuan size for some time to come. It now has the tools to do so .. 1/2 hour total program
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The Federal Reserve CannotLimit The Fallout Globally "The Federal Reserve has held back the last two times because of pleas about external forces. I have been warning that central banks have lost their SOVEREIGNTY. The Fed had 'no choice' but to raise raise for the U.S. economy is their responsibility. They cannot tell Congress they have failed to act because of emerging markets have borrowed half the amount of U.S. debt since the financial crisis .. The Fed cannot limit the fallout. This is a massive debt crisis at the Sovereign level. It's just time. All our models are warning to strap yourself in tight. This ride will pick up velocity come March. For now, beware of the DEFLATIONARY collapse."
- Martin Armstrong
link here to the reference
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Sam Zell Provides Opinions On 22 Topics Mish Shedlock* is amazed at the CNBC discussion with billionaire Sam Zell .. Zell warns on a recession coming - see our link below from this morning .. Zell discussed a wide variety of topics from the Federal Reserve rate hike, the risk of a near-term recession, real estate, energy, various foreign investment ideas. The interview was before the Fed announcement.
1. Economy: High probability that we're looking at a recession in the next 12 months.
2. Rate Hike: Interest rate hike is probably 6 or 8 months too late. I think that the economy is closer to falling over than it is to going up.
3. U.S. Dollar: Devalued currencies make it very difficult for the U.S. to compete internationally.
4. World Trade: World trade is slowing. Currencies continue to be manipulated. You're looking at the beginnings of layoffs in multinational companies. Weakness is going to be pervasive.
5. Global Deflation: You can't put aside China. You can't put aside Europe. If China's numbers turn out not to be as accurate as we think, China could go into a recession. That's about as deflationary a scenario as you could possibly come up with. & one that would for sure impact growth & affect Janet Yellen's decision.
6. Fed Tools: "Uh" … [as in the Fed has none]
7. Asset Prices: Assets will get cheaper.
8. Cash: With zero interest rates the penalty for holding cash is not very significant.
9. Stock Market: Nothing cheap. A number of falling knives that have been obfuscated by Amazon & Facebook et cetera. If you take out those stocks, the stock market isn't doing real well.
10. Mexico: Mexico is terrific. I think there's extraordinary opportunity there.
11. China: I don't think China is growing as fast as it reports to be. And I think that the world has a significant deflationary risk coming from a slowdown in China which I think would impact the cost of goods all over the world.
12. Brazil: Brazil is obviously suffering significantly. On the other hand, as an investor I'm always looking at where nobody else is willing to go. We're there already and under the right set of circumstances wouldn't have any problem investing in Brazil today. I just think you can't lose sight of the fact that this is a country with 180 million people. It's still growing. It's self-sufficient in water, oil, food. It's an extraordinarily badly managed you know entity. But the extraordinary part hasn't changed. I'm somewhat of an optimist & I think this whole process will be a cleansing process.
13. Oil: It's not so much prices as it is specific opportunities. What makes the opportunity is the distress of the situation.
14. Natural Gas: I'm probably more focused on gas than oil. And it's, you know, it's a little bit like real estate. I mean we made a fortune because we bought real estate at a discount to replacement cost. Well we're buying gas in the ground, gas that's been drilled. People have spent $10 million a well, we're buying wells at dramatically less than that. So it's the same kind of creating a competitive advantage by virtue of your entry price.
15. Real Estate: It's very hard not to be a seller. And so we're in effect fulfilling in some respects our longer term strategy where we're liquidating the remaining garden apartments we have. I'm not a big fan of buying at these cap rates.
16. Blackstone: Blackstone is just buying brick and mortar. And they've been able to raise staggering amounts of money. And they've got to put that money to work. That's something we've never wanted to be in a position of having so much capital that it affects our decision-making on an ongoing basis.
17. Currencies: I'm very concerned about what's happening in currencies. I think that you know Bretton Woods in 1948 was the allies coming together and saying we can't recover in the world without growing free trade. We can't create growing free trade without stable currencies. So let's make sure we have stable currencies. That worked for a long time. Now we have very unstable currencies. World trade is slowing.
18. Dodd-Frank: I've never known of a single situation in my life where reduction in liquidity was a plus. And effectively Dodd-Frank has dramatically reduced liquidity & that's a big negative. & that's something we haven't dealt with yet.
19. Politics: The American people are extraordinarily angry. The American people are extraordinarily depressed. The last time we had anything like this in my opinion was 1979. [To a statement regarding Trump's popularity Zell responded]: It's because you guys are sitting here in New York City & you're not in Des Moines. And you're not in Boulder & you're not all over the country. & you're not seeing the enormous disparity that has existed between you know the coasts & the rest of the country. We have a lot of very unhappy people & I think this election is reflecting it. & I think it will be very dangerous.
20. Flat Tax: I think if I were given a straight choice I would be in favor of a simple flat tax.
21. Government Bonds: I'm not a big lender of money to governments period.
22. Climate Change: The level of certainty of exactly what is happening has a lack of humility & arrogance to it that scares me. As far as I'm concerned, conventional wisdom is my greatest enemy. And this strikes me as an awful lot of conventional wisdom.
LINK HERE to more info
LINK HERE to our post this morning
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Federal Reserve Rate Hike Doesn't Match the Economy John Rubino* reflects on the 1/4 point rate hike by the Federal Reserve announced yesterday .. highlights the junk bond crisis is quietly sucking away wealth .. 20 minutes
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Federal Reserve Will Need To Change Bad News Is Good News Sickness 
LINK HERE to the essay
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Dr. Marc Faber*: Federal Reserve Initiating Its Tragedy Faber says the Federal Reserve has hiked precisely at the wrong moment .. emphasizes the economy is weak .. "The Fed is on a wrong plan."
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TAKE A BREAK? This 2 minute video is from Holland & their version of America's Got Talent. Those who grew up with James Brown & his genre will appreciate this.
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The Federal Reserve Is Causing Instability "The bubble is in low interest rates (GOVERNMENT) rather than the markets .. The crisis was created by the ZERO interest rates. This has wiped out the elderly and destroyed the so-called American Dream. The middle class has been collapsing .. Pension funds have chased long-term rates, driving them lower and lower in an attempt to meet their future obligations .. China poured more concrete in three years than the USA did in nearly a century. This has driven the commodity markets and that has come to an end. China thus is blamed for the slow down and for the decline in its currency, which they call a war and manipulation. The trend has simply changed .. Combining these elements does not speak well of the future .. Nobody seems to understand the dynamics of the trend in motion."
- Martin Armstrong
link here to the reference
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Billionaire Sam Zell Warns Federal Reserve Is Too Late, "Recession Likely In Next 12 Months" Zell thinks there is a high probability of a recession within the next 12 months .. the U.S.$ is adversely affecting corporate profits for U.S. multinational corporations .. emphasizes world trade is slowing .. currencies continue to be manipulated .. "we are still looking all over the world for demand."
LINK HERE to the Bloomberg
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Sign of the Bottom – Finally – in Mining Stocks Jason Goepfert of SentimenTrader highlights an indicator which may indicate a bottom to mining stocks - the last-ditch effort of suspending their dividend payments .. references the example of Anglo American .. "By the time the companies reached this desperate measure, metals and mining stocks had already been hit extremely hard (a company will never suspend a dividend in anticipation of tough conditions). By the time Freeport suspended its dividend in 1998, the S&P Metals & Mining Index was down 50% from its monthly closing high. In 2008, it was down 67%. Currently, it is down 69%. That tended to be about it for the selling pressure. A month later, the Metals & Mining Index was higher by 14%, 40%, and 12%, respectively. Six months later, the returns were much better. These dividend suspensions are exactly what potential shareholders should be looking for as a signal that sentiment is nearing a trough." .. courtesy of Daily Wealth
LINK HERE to the site
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Grant Williams*: The End Of The Road Peak Prosperity's Chris Martenson interviews Grant Williams .. Williams is very skeptical of the Federal Reserve's ability to continue to control market forces much longer .. "I think we've reached the end of the road. That's not to say the end of the road is a brick wall. We can be trying to turn the car around for a year, who knows, trying to find another way out of this thing. But, we're there. I mean, believe it or not, we are there. And, so how this thing plays out, none of us know. But, I suspect that the tactics that are going to be employed are going to get more and more desperate, because they have to keep going now. They're so far in, they have to keep going, and keeping going means doing more and more extraordinary things .. You wouldn't invest in the S&P where it is now, after the run it's had. G-d knows you wouldn't invest in government bonds where they are now. You might take a long hard look at asset prices and think, 'Well, you know what, actually, I might buy some base commodities here, because they've been just completely slaughtered.' But, you certainly wouldn't be investing in the two things that they need you to invest in, which are government bonds and equities .. So, that's the real problem. And, the fact that they realize that tells me that we are getting to the end of this road, because that credibility is not something they can maintain forever, particularly when they've boxed themselves in with negative interest rates." .. 1 hour
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Dire Indicator Warning
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Where Dr. Marc Faber* Sees Opportunity Faber discusses potentially attractive investments in Asia - says the economies in IndoChina are growing ok, sees opportunities there for investment .. on the U.S.: "I don't think U.S. stocks are attractive."
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Bill Gross* Feedback On The Federal Reserve Rate Hike Bill Gross* discusses the Federal Reserve's decision to raise rates a quarter point & the dangers of being too accommodative for too long - "perpetuating zombie corporations" .. energy companies getting cheap financing to overproduce .. difficulties for savers & pension funds in a ZIRP environment .. 5 minutes
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