Bank of America to increase its prime lending rate to 3.50% from 3.25%, effective immediately

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Citibank raises its base lending rate to 3.50% from 3.25% - @CNBCnow See original on twitter.com  banking  21m Bank of America to increase its prime lending rate to 3.50% from 3.25%, effective immediately - @CNBCnow See original on twitter.com  United States  26m US stocks rally after the Federal Reserve raises key rate; Dow gains about 224 - @CNBC Read more on cnbc.com  economic indicators  37m US dollar trades lower against its main rivals after the Federal Reserve raises its benchmark interest rate - @MarketWatch Read more on marketwatch.com  banking  41m PNC Bank raises its prime rate to 3.50%, effective tomorrow - @CNBCnow See original on twitter.com  US economic indicators  59m Federal Reserve Chair Yellen: US income prospects are improved, car sales up, housing 'has been recovering very slowly' - @CNBC Read more on cnbc.com  US economic indicators  1h Federal Reserve Chair Yellen: We have seen 'substantial improvement' in US labor market conditions End of alert  United States  1h Federal Reserve Chair Yellen, in response to a question, says the bank could study negative interest rates if the economy needed it - @MarketWatch Read more on marketwatch.com  United States  1h Federal Reserve Chair Yellen: I'm confident about the fundamentals of the US economy End of alert  US economic indicators  1h CBOE volatility index hits session low as Federal Reserve's Yellen speaks, last down 12% - @ReutersBiz See original on twitter.com  US economic indicators  1h Federal Reserve's Yellen: Economic recovery has come a long way, still room for labor market improvement; monetary policy remains accomodative - @CNBCnow See original on twitter.com  US economic indicators  1h Federal Reserve Chair Yellen urges press not to 'overblow' the significance of first quarter-point rate hike End of alert  United States  1h Federal Reserve's Yellen: Recent softness in US inflation data is attributed to 'transitory' factors that are expected to abate - @WSJ Read more on blogs.wsj.com  US economic indicators  1h Federal Reserve Chair Yellen: The stance of US monetary policy remains 'accommodative;' committee expects only gradual increases in fund rate will be warranted. End of alert  US economic indicators  1h Federal Reserve Chair Yellen: 'The economic recovery has clearly come a long way although it is not complete' - @BCAppelbaum =================================================== The Federal Reserve System‍—‌also known as the Federal Reserve or simply as the Fed‍—‌is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907. Over time, the roles and responsibilities of the Federal Reserve System have expanded, and its structure has evolved. Events such as the Great Depression in the 1930s were major factors leading to changes in the system. The U.S. Congress established three key objectives for monetary policy in the Federal Reserve Act: Maximum employment, stable prices, and moderate long-term interest rates. The first two objectives are sometimes referred to as the Federal Reserve's dual mandate. Its duties have expanded over the years, and as of 2009 also include supervising and regulating banks, maintaining the stability of the financial system and providing financial services to depository institutions, the U.S. government, and foreign official institutions. The Fed conducts research into the economy and releases numerous publications, such as the Beige Book. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors or Federal Reserve Board (FRB), partially presidentially appointed Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks, and various advisory councils. The federal government sets the salaries of the Board's seven governors. Nationally chartered commercial banks are required to hold stock in the Federal Reserve Bank of their region, which entitles them to elect some of their board members. The FOMC sets monetary policy and consists of all seven members of the Board of Governors and the twelve regional bank presidents, though only five bank presidents vote at any given time: the president of the New York Fed and four others who rotate through one-year terms. Thus, the Federal Reserve System has both private and public components to serve the interests of the public and private banks. The structure is considered unique among central banks. It is also unusual in that the United States Department of the Treasury, an entity outside of the central bank, creates the currency used. The Fed considers the Federal Reserve System "an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms." The U.S. Government receives all the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. In 2010, the Federal Reserve made a profit of $82 billion and transferred $79 billion to the U.S. Treasury

Small Australia banks to gain as bigger rivals face mortgage capital increases

Ed Balls: Labour government would fast-track the mansion Tax Shadow Chancellor brings controversial proposal to top of Labour’s ‘to do’ list Andrew Grice Author Biography Monday 22 December 2014 Imposing a mansion tax on homes worth more than £2m would be one of the first acts of an incoming Labour government next May, Ed Balls has revealed. In an interview with The Independent, the shadow Chancellor said he hoped that the 100,000 people with the most expensive properties would start to pay the levy in the 2015-16 financial year, even though that starts a month before the May general election. Mr Balls disclosed that work on introducing the mansion tax would start on “day one” of a Labour administration. The tax would be included in his first Budget so the £1.2bn a year it would raise could be injected immediately into the NHS. He has asked the Treasury to start preparations before the election. READ MORE: • Ed Balls interview: 'If I think about the deficit when I’m playing the piano, it all goes wrong' • Editorial: Bad policy, good politics “Saving the NHS will be at the heart of our first Budget,” he said. “I would like to see that revenue coming in in the first year of a Labour government, before the end of the financial year. We will have to see the practicalities.” Mr Balls denied this would amount to retrospective legislation: “A charge is paid in that [financial] year on the valuation on a date in that year. We will be clear what we are going to do in our manifesto. No one will have any doubt about our intentions.” He recalled that in 1997, the incoming Blair Government imposed a £5bn windfall tax on the privatised utilities seven months after a May election. His announcement is designed to answer claims that the mansion tax revenue would be delayed, jeopardising Labour’s pledge to spend £2.5bn more on the NHS than the Conservatives. The rest would come from a levy on tobacco firms and reducing tax avoidance by hedge funds. ... Mr Balls, a former Treasury special adviser and minister, believed the Treasury is already working on the mansion tax, in line with normal Whitehall pre-election preparations. “I am sure that the Treasury will be gearing up to make sure we can deliver this,” he said. “As a backstop, we will legislate for the mansion tax to start in the following financial year, 2016-17.” The Treasury has reportedly established there are 55,000 homes worth more than £2m in Britain The Treasury has reportedly established there are 55,000 homes worth more than £2m in Britain Labour’s mansion tax will be about £3,000 year for homes in £2m-£3m bracket, with a higher charge for more expensive properties. Mr Balls said nobody whose house was worth less than £2m today would pay it, because the starting point would be raised. To answer criticism that the levy would hit pensioners in expensive homes, he said only those on the 40p higher income tax rate would have to pay it. Others could defer it until when the property was sold or they died. Householders would have to disclose their property’s value on their income tax return. HM Revenue & Customs would carry out checks but if a person obtained an independent valuation, HMRC would not “second guess” it, Mr Balls said. The shadow Chancellor said Labour’s tax would build on George Osborne’s 15 per cent levy on “enveloped” properties worth more than £500,000 bought by a company rather than an individual. HMRC would replicate that system for people who owned properties worth more than £2m. Mr Balls argued that building on an existing system would be “a more straightforward proposition”. He decided not to change the “mansion tax” name coined by the Liberal Democrats, who support a similar charge. He said David Cameron had failed to prevent “ending the spare room subsidy” being called the “bedroom tax” and Margaret Thatcher had not stopped her “community charge” being known as the “poll tax”. ========= UK unemployment fell 63,000 to 1.96 million in 3 months to October, figures show Unexpected bills Why stamp-duty tax cuts may hurt homebuyers Dec 13th 2014 | From the print edition Timekeeper Rolex values your time. Timekeeper by Rolex. .. “TODAY I’m cutting stamp duty for millions of homebuyers,” crowed George Osborne, the chancellor of the exchequer, on December 3rd when announcing reforms to stamp duty, a tax on buying property. Yet hidden in the forecasts of the Office for Budget Responsibility (OBR) is an assumption that implies most homebuyers will be made worse off by the tax cut. For every one percentage-point reduction in the tax, the OBR assumes that house prices will rise by 1.4%, leaving buyers with a bigger overall bill. At first sight, this seems odd. Economics suggests that the sensitivity of buyers and sellers to changes in the price—“price elasticity”, in the jargon—influences who ends up paying most for “transaction taxes” like stamp duty. Housing supply is not very responsive to price: it is hard to build homes quickly to take advantage of a price spike. That means, according to economic reasoning, that, if stamp duty is cut, you would expect prices to rise and sellers to benefit more than buyers. Unexpected bills Office for Budget Responsibility What economists would not expect, though, is that buyers would end up absolutely worse off. So why are buyers left with a bigger overall bill? Mortgages are key to solving the mystery. Most buyers are what economists call “credit-constrained”. What they can splash out on a new place is limited by what they can borrow. And the amount they can borrow depends in part on how much cash they can put down as a deposit. Stamp duty—a bill which must be paid immediately on buying property—drains that cash. When it is cut, buyers can put down higher deposits and borrow more. As a result, demand rises, pushing up the price enough to more than offset the benefit of the tax cut. If the OBR is right, buyers of a property that cost £300,000 before the change in stamp duty now face £4,000 less tax but a price £5,600 higher. Buyers who were not previously in the market but can now afford a deposit will benefit, but this group is small. The main winners are homeowners, who benefit from higher house prices. There is a parallel with the government’s flagship intervention in the housing market: Help to Buy. That scheme aims to assist buyers who cannot afford deposits by providing them with government loans. But its biggest effect is to boost demand and hence prices. Homeowners keep winning from government policy. ========== Small Australia banks to gain as bigger rivals face mortgage capital increases Mon, Dec 08 05:16 AM EST * FSI aims to level playing field for small banks * Credit Suisse, Bell Potter upgrade regional banks * ANZ, NAB seen as most vulnerable to new capital recommendations By Swati Pandey SYDNEY, Dec 8 (Reuters) - Australia's smaller banks stand to benefit from a government-backed financial sector review that has recommended the nation's big lenders set aside more capital for their main business of mortgages, in a move towards a level playing field. The recommendation, if implemented, could help the smaller banks grab market share from the country's 'Big Four' major lenders for whom mortgages account for 40-60 percent of total loans. It will also help make them more competitive by narrowing the gap between the majors and their smaller peers on the capital set aside against potential losses on mortgages. Australia's major banks will need as much as A$48 billion ($39.68 billion) after the financial system inquiry (FSI) on Sunday called for stronger capital for them to become among the world's safest lenders. Major banks currently, on average, keep aside 18 percent capital against potential losses on home loans compared with 39 percent for smaller peers, helping the big banks produce better shareholder returns. Under the proposed rules, though, the majors will have to set aside 25 percent to 30 percent capital. "It is pleasing the inquiry has acknowledged the competitive gap enjoyed by the majors needs to be closed and would like to see action taken quickly to address this issue, before the dominance of the Big Four is further entrenched. If that happens, Australian consumers will ultimately be the losers," Jon Sutton, acting CEO of Bank of Queensland, said in a statement. Recommendations by the inquiry, chaired by David Murray, former head of Commonwealth Bank of Australia, is open to consultation with regulators and industry until March 31. Following the FSI report, brokerages including Credit Suisse and Bell Potter upgraded ratings on regional banks. Smaller banks Suncorp, Bendigo & Adelaide Bank and MEBank praised the inquiry's effort to try and level the playing field. Big banks have already warned that raising capital requirements and mortgage risk weightings will lead to higher costs to consumers and smaller dividends for shareholders. Credit Suisse downgraded Australia and New Zealand Banking Group while Morgan Stanley noted that ANZ and National Australia Bank, with the lowest tier-I ratios among the big banks, were the "most vulnerable." "What Murray is trying to do is take away the lopsided nature of allocation of capital from the Big Four to the balance of the banking community," said Mark Bouris, executive chairman of Yellow Brick Road, a mortgage provider part-owned by Macquarie Group Ltd. (Editing by Muralikumar Anantharaman) ============================= Fed confident on U.S. growth, opens door wider to rate hike By Howard Schneider and Michael Flaherty WASHINGTON Wed Dec 17, 2014 8:05pm EST (Reuters) - The Federal Reserve on Wednesday offered a strong signal that it was on track to raise interest rates sometime next year, altering a pledge to keep rates near zero for a "considerable time" in a show of confidence in the U.S. economy. Closing out a two-day meeting against a backdrop of solid domestic growth but trouble overseas, the U.S. central bank said it would take a "patient" approach in deciding when to bump borrowing costs higher. Fed Chair Janet Yellen told a news conference that "patient" meant the policy-setting Federal Open Market Committee was unlikely to hike rates for "at least a couple of meetings," meaning April of next year at the earliest. U.S. stock markets and bond yields rose as investors digested a statement that evinced faith in the economy while still projecting a slow-going approach to rate hikes. The dollar rallied broadly against major currencies. After some initial volatility, futures markets continued to point to a rate rise in September, while 13 of 19 big Wall Street firms polled by Reuters said they expected an increase by June, in line with results from a November survey. The Fed has held benchmark overnight rates near zero since December 2008. [FED/R] "Based on its current assessment, the committee judges that it can be patient in beginning to normalize the stance of monetary policy," the Fed said. Significantly, it said the statement was "consistent" with its prior guidance that it would wait a "considerable time" before hiking rates. Eric Green, an analyst with TD Securities in New York, said Yellen's definition of "patient" was "less dovish than a reading of the statement would suggest." "In effect, it is open season after the March FOMC meeting," he said. Yellen told reporters that even with a sharp drop in energy costs, the

Fed felt confident that inflation would eventually turn higher and approach the central bank's 2 percent target, and she suggested officials would feel comfortable raising rates as long as other economic signals stayed strong and expectations of future inflation held firm. "By the time of liftoff, participants expect to see some further decline in the unemployment rate and additional improvement in labor market conditions,"

Yellen said. GO-SLOW APPROACH After a week of turbulence in global financial markets, the U.S. central bank looked firmly beyond economic difficulties in the euro zone, Japan and Russia and offered a mostly upbeat assessment of the U.S. economy's prospects. Updated quarterly projections, presented as ranges that exclude the three highest and lowest individual forecasts, showed policymakers continue to expect the U.S. economy to grow between 2.6 percent and 3.0 percent next year. They foresee the unemployment rate, currently at a six-year low of 5.8 percent, moving down to an average of between 5.2 percent and 5.3 percent toward the end of next year, a bit lower than in their previous forecasts in September and in line with what they think is in keeping with full employment. Fed officials, however, acknowledged inflation was likely to slow next year to between 1.0 percent and 1.6 percent, the result of a cratering in oil prices. But core inflation, which excludes volatile food and energy costs, is projected to dip only a bit next year before turning higher to close in on the Fed's target by the end of 2016. Balancing optimism on growth and jobs with the reality of low inflation, policymakers indicated they would take a slower approach to the pace of future rate hikes. The median projected federal funds rate - the Fed's main economic lever - was 1.125 percent for the end of 2015, a quarter percentage point lower than the last projection. Officials also lowered projections for 2016 and 2017. Despite the sharp drop in oil prices and the collapse of the Russian rouble, the Fed's statement excluded any mention of the recent global economic turmoil. Asked whether spillover from Russia's crisis could harm the U.S. economy, Yellen said the two countries were too loosely linked to expect any appreciable impact. "I see the spillover as pretty small but we're obviously watching that closely," she said. The vote to back the statement was seven to three, with dissents from both ends of the policy spectrum. (Reporting by Howard Schneider and Michael Flaherty; editing by Tim Ahmann, Paul Simao and Leslie Adler) ========================= Khalil: Corrupt state employees will be denied immunity Connect Tweet  RSS  Follow  Email  Print Share The Daily Star BEIRUT: Finance Minister Ali Hasan Khalil vowed Wednesday to pursue his anti-corruption drive in the real estate department and assured that the political immunity would be lifted on any official involved in illegal activity. Speaking at a news conference after visiting the Justice Palace, the minister said that he handed to the attorney general seven files pertaining to the illegal seizure of government-owned lands in several areas of Lebanon. The attorney general also received details about the involvement of certain clerks in the real estate department who are suspected of receiving bribes and favors from some citizens. This marks the first time since the Taif Accord that senior and junior public employees clerks at the Finance Ministry’s real estate departments are prosecuted for graft and abuse of power. Sources said the state loses hundreds of millions of dollars each year as result of the rampant corruption in the real estate departments . The minister did not specify who seized the lands of the state in rural areas nor the political parties that were behind them. Khalil said that over 93 million square meters (23K Acres) of government lands have been illegally seized, adding that the ministry was also checking on reports that there were similar cases in many other regions. “There is no political immunity for any person. Soon you will hear of new files, and one of them is Customs,” he said. Earlier, Khalil referred the names of officials suspected of corruption to the attorney general and transferred most real estate employees to new locations in a bid to stamp out graft. Lebanon is seen as one of the worst countries in terms of corruption, according to surveys carried out by Transparency International. Some news media reported that the authorities are questioning a government employee who owns five apartments and cars although his salary is below LL1 million ($666) a month. A version of this article appeared in the print edition of The Daily Star on December 18, 2014, on page 5. - See more at: http://www.dailystar.com.lb/Business/Local/2014/Dec-18/281438-khalil-corrupt-state-employees-will-be-denied-immunity.ashx?utm_content=bufferc4af3&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer#sthash.f45X7hZk.dpuf ========================================= Capital call for Australian banks Mon, Dec 15 20:25 PM EST By Daniel Stanton SINGAPORE, Dec 16 (IFR) - A long-awaited report last week called on Australian banks to raise additional capital to manage the risk of a housing crisis, potentially sparking raisings of up to A$20bn (US$16.6bn) if regulators adopt the recommendations. David Murray's Financial Stability Inquiry had been examining the health of the domestic banking system and its ability to cope with another crisis. The report, published on December 7, advised that Australian lenders should aim to be in the top quartile of international banks, in terms of their core equity Tier 1 capital, and warned that they should not rely on an implicit government guarantee to bail them out of trouble. Differences in regulatory and accounting treatment between different countries mean it is hard to compare capital ratios, but the report has estimated that Australian banks have core equity Tier 1 ratios of 10.0%-11.6% under BIS treatment, short of the 12.2% required to be in the world's top 25%. Morgan Stanley estimated that the four major banks needed to raise A$8bn-$12bn to meet the FSI's recommended capital levels, while Deutsche Bank put the shortfall at A$20bn, based on the midpoint. Morgan Stanley said it expected banks would need to raise A$38bn in total come the end of the 2017 financial year to support loan growth and achieve a 10% CET1 ratio under Australian standards, with the funds coming from dividend reinvestment plans, asset sales and share placements. "On our estimates, ANZ and NAB look more vulnerable to higher capital requirements than CBA and WBC (Westpac), given a lower Basel CET1 starting point and weaker capital generation," wrote Morgan Stanley analysts. "With NAB likely to benefit from asset sales and the run-off of legacy assets in coming periods, we view ANZ as the most likely of the banks to undertake a large share placement or rights issue in coming months." Shares in the Big Four banks all rose last Monday, as it emerged that the recommended capital increase was less than investors had feared. ANZ and Commonwealth Bank of Australia went up 0.9% each, while Westpac and National Australia Bank gained 1.0% and 1.7%, respectively, against a 0.7% increase in the All Ordinaries index. Bonds and credit default swaps, or CDS, were largely unchanged. Smaller banks, which currently have a lower CET1 requirement of 7%, fared less well: Bank of Queensland shares dropped 1.8%, while Bendigo and Adelaide Bank and Macquarie Bank each fell 0.2%. The report recommended that banks using an internal ratings-based approach should increase the risk-weighting they applied to residential mortgages to 25%-30% from the current level of around 18%, which would consume an extra 1% of CET capital, equivalent to A$14bn for the Big Four banks combined. Standard & Poor's estimated that the major Australian lenders were likely to be close to the CET ratio minimum for domestic systemically important banks of 8% under Australian criteria, if they applied the recommended risk-weighting, meaning that they would need to raise capital to maintain a buffer. Less government support The report said that banks should bolster their capital ratios to weaken perceptions of an implicit government guarantee, not least because Australia was anxious to hold on to its AAA sovereign credit rating. The current implied state support means that the issuer credit ratings of the Big Four banks are two notches higher under ratings from Moody's and S&P, and the latter considers the government "highly supportive". As a result, there is a risk that bank bonds can be downgraded if implicit state support is removed. "Government should not generally guarantee the ongoing solvency and operations of individual financial institutions," the report said. "However, there may be instances - particularly where system-wide failure is threatened - where public sector support of the basic functions of the financial system is warranted, such as liquidity support by the Reserve Bank of Australia." The language in the Murray report encourages a move towards loss-absorbing bonds to help resolve a crisis at one of the banks, rather than drawing on taxpayer funds. It also suggested introducing a new capital security that would rank between Tier 2 capital and senior unsecured notes. An industry consultation will run until March 31 2015, after which regulators will decide whether or not to take the recommendations on board. This means that the amount of extra capital banks need to raise will not be known until next year. Another part of the report recommended that disclosure requirements could be reduced for large corporate issuers selling plain vanilla bonds, in an attempt to promote the retail bond market. (Reporting by Daniel Stanton, editing by Steve Garton) ========================

A Divided Federal Reserve is Ignoring Economic Data and Keeping their Fingers Crossed

A Divided Federal Reserve is Ignoring Economic Data and Keeping their Fingers Crossed July 01, 2014 Stewart Richardson, Chief Investment Officer, RMG Wealth Management There are a growing number of regional Fed Presidents who are increasingly nervous about the Fed’s ultra-easy monetary policy. The end of QE is inevitable in the next few months, and regional Fed Governors are openly talking of the need for rate rises early next year. They believe that the economy has healed enough, their key targets on unemployment and inflation are very close to being achieved and they are increasingly worried about the recent pick up in the rate of inflation. “You are basically going to be near normal on both dimensions later this year…That’s shocking, and I don’t think markets, and I’m not sure policy makers, have really digested that that’s where we are.” James Bullard, St. Louis Fed President speaking in an interview on Fox Business Network last week (emphasis ours). As an aside, Bullard is very much seen as an opinion former having helped blaze the QE2 trail on the back of too low inflation. Despite a growing number of regional Fed Presidents openly worried about current policy, Janet Yellen and her Reserve Board colleagues in Washington continue to look in the rear view mirror and believe that pumping up asset prices and ignoring rising CPI is a good policy mix. As we asked last week, have these guys not learnt anything from past mistakes? It strikes us that interest rates and bond markets are increasingly focused solely on what Janet Yellen is saying and they are ignoring the broader message that is coming out of the FOMC and is evident in the economic data. The chart below shows the US Treasury curve from the March FOMC meeting to today, and although the two year note has risen by 4 basis points, yields have declined at every other point along the curve. This is despite FOMC forecasts for the Fed Funds target being higher than they were at the time of the March meeting. Graph 22 So who is right? Is it the bond market, encouraged by soothing words from Yellen and perhaps worried about the underlying health of the economy? Or is it the regional Fed Presidents? We have said many times that the underlying pace of real growth in the US economy is likely somewhere around 2% to 2.5%, and despite a disastrous first quarter, we still believe this to be the case. We said last week that we felt that a policy error is increasingly likely and in our opinion, yields have to rise in the event that the FOMC move now to either prevent inflationary pressures or fall behind the curve followed by a period of catch up (i.e. more aggressive rate rises) later in 2015. The only scenario whereby rates stay low or move even lower is if the underlying health of the economy is much weaker than we think. There are some very clever people who believe that the US is only one shock away from a new recession, and the odds of this happening are certainly not zero, and are probably rising. With markets seemingly grinding to a halt even before we get to the dog days of summer, should we be worried about an imminent shift higher in yields? Possibly not, although there are several signals that should be monitored closely. As well as watching for more signs of hawkish shifts amongst FOMC members, measures of inflation and wage growth should be monitored closely. Although we know that Yellen simply does not care about rising inflation, there is no denying that inflationary pressures have been building in recent months, alongside discernible improvements in the employment market and wage growth. Although markets have bought into her dovish narrative (hook line and sinker) over the Spring, this could change very quickly and a Fed Chairperson with declining credibility could be a dangerous backdrop for the bond markets later this year. The chart below shows the growth in average hourly earnings for the US private sector versus the Fed Funds Target Rate. It appears to us that earnings growth is on a rising trend and is at a level that would be consistent with higher interest rates – get to work Madam Chairperson! Graph 23 If we are right in our view that yields across the US curve shift higher during the second half of the year, the investment stance should be quite simple. We need to be long the US Dollar against most currencies, underweight or short bonds and most likely underweight or short equities (there’s that broken record again!). In our view, it is only a matter of time before this scenario plays out. What we cannot predict in these completely manipulated/low volume markets is the timing. What we can say is that buying longer dated optionality is exceptionally cheap at the moment and if/when this scenario starts to become reality, markets will adjust rapidly before investors have a chance to fully react. It makes sense to be positioned for this scenario today, albeit in modest size only, and looking to add to positions as and when momentum builds. Stewart Richardson, Chief Investment Officer, RMG Wealth Management - See more at: http://www.marketviews.com/divided-federal-reserve-ignoring-economic-data-keeping-fingers-crossed/#sthash.WDUZbVZ2.dpuf