In about an hour the Fed will give its much-anticipated rate hike decision. Analysts will pore over every word looking for changes. And they will find them.

I expect a new word today: "extra". We will be extra vigilant, extra-cautious, extra data-dependent. Perhaps it's "more" vigilant, or "even more" vigilant etc., to stress the notion the Fed was vigilant when it wasn't.

Whatever, the meaningless word change, analysts will yap about it for the next week or even month as if it matters. But it doesn't.

Bubbles Can Only Get So Big

At some point in every Fed-sponsored asset bubble, the bubble simply cannot expand any further. It's like a Ponzi scheme. Eventually the pool of greater fools runs out.

And consumers just stop buying. They can no longer afford houses. Perhaps they have one too many already.

Earnings estimates start to fall. Businesses don't want to expand because consumers buy less stuff.

Rate Cuts Coming

The Fed will hike today, or not. It doesn't matter because it is simply too late to matter. Yesterday I wrote 2019 Rate "Cuts" in Play.

That won't matter either. It's too late to matter.

What Does Matter?

Image placeholder title

What matters is the massive amount of financial speculation and stunning amount of junk bonds. What is widely known as the "Everything Bubble" was fueled by corporate buying for anything and everything whether or not companies could turn a profit.

Fed-Induced Bubble

RECOMMENDED ARTICLES

The Fed helped blow this bubble the by keeping interest rates too low, too, long. By encouraging financial speculation and consumption all in the nonsensical battle to fight price deflation.

CPI Deflation Not a Problem

The BIS did a historical study and found routine deflation was not any problem at all.

"Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the study.

For further discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?

Rise of the Zombies

Meanwhile, take stock of the [Rise of Zombie Corporations](Rise of the Zombie Corporations).

And take another look at the lead chart There Have Never Been So Many Bonds That Are Almost Junk.

Credit Spreads Signal Recession

Finally note that $176 billion worth of corporate bonds has fallen from 'A' to 'BBB' so far this quarter - the highest since late 2015.

Importantly, and unlike 2015, it's not just oil-related.

Bulge of BBB-Rated Debt

The BIS Fears "Bulge of BBB Debt" and "Financial Cycle" Default Waves as it should. And on top of it, Credit Spreads Signal Recession.

People believe one extra rate hike or cut matters. Phooey. It's far too late to matter what the Fed does now.

Mike "Mish" Shedlock

Economic Reality: Bottom 50% of Americans No Longer Matter

The Fed likes to brag about the “We saved the world” recovery. However, the unfortunate truth of the matter is a record Half of American Families Live Paycheck to Paycheck. Does it Matter? Let’s investigate.

Fed Baby Steps Coming: What's Powell Up To?

The odds of a double rate cut in September plunged from 40% recently to 31% last week then to 0% today.

Too Late to Worry: Fed Way Late to Rate Hike Party

Golden Opportunity to Hike in 2014. The Fed had a golden opportunity to hike in 2014.

Powell Promises Patience: So What? It Doesn't Matter

At a speech in Atlanta, Fed chairman Jerome Powell promises patience and walked back his autopilot statement. So what?

Economic Stupidity and Fed Groupthink Remain "Well-Anchored"

NY Fed President John Williams reiterated complete nonsense on the Phillips Curve and inflation expectations today.

Too Much, Too Little, Too Late: Junk Status for Illinois Coming Up

The House voted to override Rauner’s veto of a budget today following a brief lockdown mode after white powder was thrown at Governor Bruce Rauner.

Too Big To Sell

Wealthy baby boomers are trapped in homes that are too big to sell. They want to downsize but can't get what they paid.

Pension Problem Too Big To Ignore?

Bloomberg writer Danielle DiMartino Booth says the Pension Crisis Too Big for Markets to Ignore. But I have a question: If the problem is too big to be ignored, why is nearly everyone complacent?

An Eye on M1, Cyclicals, and Junk Bonds: What Matters?

Rosenberg says "Keep an eye on M1", others watch Cyclicals, and still others have an eye on junk bonds.