What Does Spooked The Fed?

In the aftermath of last week’s FOMC “dovish hold” disappointment, it is not only the Fed that has seen its credibility crushed; so have plain-vanilla tenured economists and Wall Street strategists. Recall that it was on August 13, one month before last week’s FOMC meeting, when 82% of economists said the Fed would hike in September.


Post-mortem: more than four out of five economisseds were, as always, wrong. Hardly surprising: after all, when voodoo art pretends to be science, this is precisely the outcome one gets.

But while there is no surprise in everyone being wrong (because quite simply nobody realized that the only thing is what Goldman wants), one question remains: “what does the Fed know that we don’t.”

Of course, one has to clarify what “we” means, because Zero Hedge readers know precisely what the Fed knows – it knows that a recession is coming if not already here, as we won’t tire of showing week after week.

Here are some examples of what the Fed (if less than 20% of economists) “knows“:

1) Business Inventories-to-Sales are at recesssion-inducing levels…


1a) Sidenote 1 – Wholesale Inventories relative to sales have NEVER been higher


1b) Sidenote 2 – here is why that is a problem

2) Industrial Production is rolling over into recession territory


2a) Sidenote – as Empire Fed confirmed this morning for August – inventories are collapsing (and along with that Q3 GDP)


3) Retail Sales is not supportive of anything but a looming recession…


And finally,

4) The last 6 times Auto Assemblies collapsed at this rate, the US was in recession…


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But for those who are unable to form an independent though and would rather ignore reality unwinding before their eyes, instead demanding an “authoritative” voice to crush their cognitive bias, here is Ray Dalio,

Originally appeared at: http://davidstockmanscontracorner.com/what-does-spooked-the-fed/