THE WHISTLING CONTINUES

 
How can you tell when a big time bureaucrat is jawboning or whistling past the bone yard?

Usually they come out of the woodwork with tempering statements like this latest one from William Dudley head honcho at the head Federal Reserve bank in New York.

Steve Liesman reports the latest out of the New York Fed's William Dudley. 

Key components of the U.S. economy remain healthy, and recent speculation about the Federal Reserve adopting negative interest rates is "extraordinarily premature," a top Fed official said Friday, amid mounting concerns about slowing growth.

"I think the U.S. economy is in pretty good shape," New York Fed President William Dudley said in response to a question following the release of the bank's household debt and credit report.

Dudley said monetary policy remains "quite accommodative" after the Fed's decision to hike interest rates in December. Policy has only "limited" ability to respond to volatility with rates already low, he said. 

Dudley, a voting member on the Fed's policymaking committee, spoke a day after Fed Chair Janet Yellen wrapped up two days of testimony to Congress. She faced several questions about whether the Fed would follow its counterparts in Europe in Japan to adopt negative interest rates, and left open the possibility that the Fed could do so. However, she noted that the Fed would first need to judge whether it would be appropriate. 

Key components of the U.S. economy remain healthy, and recent speculation about the Federal Reserve adopting negative interest rates is "extraordinarily premature," a top Fed official said Friday amid mounting concerns about slowing growth."I think the U.S. economy is in pretty good shape," New York Fed President William Dudley said in response to a question following the release of the bank's household debt and credit report.Dudley said monetary policy remains "quite accommodative" after the Fed's decision to hike interest rates in December. Policy has only "limited" ability to respond to volatility with rates already low, he said. 

 Dudley, a voting member on the Fed's policymaking committee, spoke a day after Fed Chair Janet Yellen wrapped up two days of testimony to Congress. She faced several questions about whether the Fed would follow its counterparts in Europe in Japan to adopt negative interest rates, and left open the possibility that the Fed could do so. However, she noted that the Fed would first need to judge whether it would be appropriate.

Concerns about a U.S. recession and recent market turmoil have put the Fed under a microscope. The S&P 500 has shed about 10 percent of its value this year, while U.S. crude oil and the U.S. 10-year Treasury note yield have plunged more than 27 percent each.

Dudley took an optimistic stance on the economy despite market volatility. He repeated Yellen's statement that economic expansions do not "die of old age."
However, he said inflation continues to lag behind the Fed's 2 percent target amid "weakness" in commodities prices. While he said that international developments will "factor into" the policy decision at its March meeting, he did not definitively say which policy course he favored 

Healthy depends like many things in life on who is defining it. We been told for months how healthy auto sales in the U.S. have been. It was one of the cheerleaders' for the Fed's ongoing multiple QE schemes major memes for months. A key component in fact, to use a Dudley reference.


Yes, sales are up, mostly trucks and SUVs, owing largely to cheaper gas prices, and so is revenue, but as the nation's third largest new car chain by vehicles sales warned yesterday, because customers are buying fewer sedans and compacts: "We're at a point now we're in discussions with most (auto makers) that we just can't take anymore car inventories at the moment, " the WSJ reported.

He went on to say that 4Q profits fell 12% despite a 5% increase in revenue. The problem is the build up of big inventories of compacts and sedans that require big incentives to move off the lots further impacting profits. The average number of days these vehicles remain on the lot are well above industry norms, in some cases approaching three months. So the higher profit margins on the big boys is being eaten into by the rising incentives needed to move passenger cars.

The above is not an isolated event in the industry, as the Journal notes, because more U.S. new-car dealers are urging auto makers to cutback production of passenger cars owing to the huge consumer demand for bigger vehicles.

Another story on Honda's announced return to selling more trucks reported:" Nearly every auto maker is building more trucks and SUVs for the U.S. as gasoline prices remain cheap and passenger cars fall out of favor, pushing their share of overall sales to a 12-year low. The last time trucks and SUVs were this popular they represented less than 40% of Honda's sales"

The fact that Fed Chair Janet Yellen in her recent talk admitted she was surprised by the lack of return in inflation should also tell you what you need to know. The guru rule gets proved once again: There are no gurus out there, just a bunch of feeble bureaucrats masquerading as such.
cnbc.com/2016/02/12/feds-dudley-key-us-sectors-in-good-shape-financial-system-clearly-stronger.