WWD : Pierre-Henri Mattout Sets Concept Store for Men

PARIS — The Saint-Germain quarter in Paris, known as the historical home and favorite hangout of musical and literary leaders including Jean-Paul Sartre and Miles Davis, is slowly turning into a men’s wear mecca.

PHM Saints Pères, a concept store for men, opened this week, walking distance from recent arrivals such as Melinda Gloss, AMI and Officine Generale.

The man behind the project is Pierre-Henri Mattout, former creative director and senior vice president of apparel at Swiss-based Victorinox, who also consulted for brands as different as Calvin Klein’s Platinum Label for Europe and Joe Fresh.

Mattout said the idea was to “propose the best wardrobe for a man today.”

“Having lived in New York for the past eight years, I love how Americans are focused on comfort and functionality, maybe less fashion, but that can be a very interesting balance. The whole outdoorsy theme was very enriching to my experience,” said Mattout, whose own brand was famously built on French preppy, before he relaunched it in January. “But I have matured since then,” he added, flashing a smile.

Architecturally, the 480-square-foot unit, located at 50 rue des Saints-Pères and planned by Le Coadic Scotto, is as sober as it can get, with simple, untreated wooden shelves and virtually no other decor except for some furniture pieces provided by the nearby Karry Gallery. “This is not your typical concept store,” noted Mattout, adding that what he wanted was “more rugged, not as precious as the others” to go along with toned-down selections.

The boutique offers everything from underwear to outerwear, plus a selection of rare art books and a room fragrance based on musk and vetiver thought up by Yann Vasnier and Carlos Huber, both industry veterans. A men’s beauty line is already in the works.

Mattout, who only kept his label’s shirt business after the reboot — “this has always been my forte,” he allowed — said he is keen on creating synergies with other men’s wear brands, which are ideally to result in exclusive collaborations. A case in point: San Francisco-based denim maker Tellason, which produces its raw selvage on vintage weaving machines from North Carolina, has come up with a special range for the store, while PHM Saints Pères is the exclusive Paris retailer to Ten c’s luxury outerwear.

The concept extends to the shop’s sneaker collection, which carries limited editions of New Balance and Converse, among others.

The unit’s shoe and apparel mix includes Junya Watanabe, Arc’ teryx Veilance, Sunspel, Lanvin, Pierre Hardy and Spalwart, as well as Mattout’s own shirt label, featuring an appealing fusion of jersey and high-end cottons patch-worked together in one look and retailing for between 175 euros to 220 euros, or $221 and $278.

Every two to three months, the boutique is to host an exhibition, with New York photographer Danielle Levitt bearing the torch. Her portrayals of the American youth are slated to kick off Thursday.

With time, as the concept matures, Mattout wants to export his retail venture into other cities — “preferably New York or Boston, Monaco and other venues in France,” he said.

WWD : John Galliano Joins Maison Martin Margiela

PARIS — When Renzo Rosso acquired Maison Martin Margiela in 2002, it was described as a wedding of fashion’s Greta Garbo with Harpo Marx.

On Monday, Rosso surprised the fashion world again by appointing John Galliano, one of fashion’s most flamboyant and controversial figures, to take over the creative direction of Margiela, founded by an intensely secretive Belgian designer.

The appointment telegraphed Rosso’s daring approach to the fashion business and raised questions about how one of the industry’s great romantics might interpret a house built on avant-garde ideas like deconstruction.

It confirmed widespread market speculation that Galliano was headed to the Paris-based company, despite recent denials during Milan Fashion Week by Rosso, whose group, OTB, controls Margiela via a subsidiary called Neuf.

“Margiela is ready for a new charismatic creative soul,” said Rosso, president of OTB. “John Galliano is one of the greatest, undisputed talents of all time — a unique, exceptional couturier for a maison that always challenged and innovated the world of fashion. I look forward to his return to create that fashion dream that only he can create and wish him to here find his new home.”

Galliano, 53, has been sitting on the sidelines since being ousted from Christian Dior and his signature fashion house in 2011. It is understood he will take over the design leadership of all Margiela lines, including couture and the women’s and men’s ready-to-wear.

He is expected to show his first designs for the house in January during Paris Couture Week.

The development marks the return of one of contemporary fashion’s most acclaimed talents, absent from the runways following racist and anti-Semitic outbursts that precipitated one of the most spectacular flameouts in recent history.

It also represents something of an about-face for Margiela, whose Belgian founder was often described as the industry’s invisible man for his Greta Garbo-like ways. Following his retirement in 2009, the house left an anonymous team to carry on his legacy, steadfastly refusing to identify any its members.

Prized for his ultrafeminine, historically inspired designs, and a particular penchant for bias-cut gowns, Galliano is hardly an obvious choice for a house known for cleft-toed boots, deconstructed fashions and all-white stores.

Yet the British fashion maverick has wide experience designing different kinds of collections, including more casual ranges for women and men under his now-defunct Galliano second line, known for its newspaper prints, distressed leathers and denim.

Despite the outcry that precipitated Galliano’s downfall at Dior, early industry reactions to his appointment at Margiela were mainly positive.

“Wow,” said Joan Burstein, founder and owner of Browns in London, who famously bought the entire collection Galliano produced upon graduating from Central Saint Martins in 1984.

“Those who have nothing against [Galliano] will be happy he’s back in the fashion world, and those who aren’t happy won’t be happy. Browns wishes him happiness as well as great success and we will follow whatever he does with great interest,” Burstein added.

“I think this will revolutionize the brand,” said Averyl Oates, fashion director at Galeries Lafayette.

“Although controversial, there is no doubt that Galliano has great energy and is an undisputed visionary. He has a wide repertoire even if he is better known for his theatrical flair, and no doubt they will find a way to bridge his style with the familiar signature deconstruction of the Margiela house,” she added.

Jonathan Newhouse, chairman and chief executive officer of Condé Nast International, said, “I am delighted that John is returning to the fashion world at Margiela. He is one of the great design talents of our day. He is in terrific form and it will be exciting to see what he creates.”

Last year, the publishing executive told British Vogue that after Galliano went into recovery, he had formed a friendship with the designer and had “opened some doors to the Jewish community,” introducing him to Jewish leaders and Rabbi Barry Marcus from London’s Central Synagogue.

Maria Luisa Poumaillou, fashion director at Printemps, said she was intrigued to see what the pairing of Galliano with Margiela would bring.

“It’s the most interesting thing I’ve seen in a long time,” she said. “It’s not immediately obvious what they have in common, except for talent.”

She said enough time had passed since Galliano’s firing for the industry and consumers to forgive and move on.

“I thought it was the ugliest sacrifice of a great talent that I’ve ever seen, so for me, wherever he’s back, he’s more than welcome. I’m very happy for John,” Poumaillou said.

She saluted Rosso’s “guts” and said the decision was a good fit for the brand.

“The most conceptual of all fashion houses fell into the hands of the man who built Diesel, so why shouldn’t it today tap the greatest living couturier, who is unemployed?” she asked. “[Rosso] has already pulled it off. We are all talking about Margiela, which will stop being a niche brand in order to become front-page news.”

Armand Hadida, founder of Paris concept store L’Eclaireur, said he bought Galliano’s first collections and was excited to have him back.

“I like the idea because that is what you expect from fashion and from players like Renzo Rosso — it’s to shake things up, to give them a second lease of life. I think that without Renzo Rosso, Margiela would have closed down,” he said.

The retailer, who is of Moroccan-Jewish origin, said it was time to let bygones be bygones. “No one has the authority to judge anyone whatsoever. We all make mistakes and it’s part of our journey. The important thing is to know your mistakes and to learn to correct them, and I guarantee you that John Galliano has done that,” he said.

“I think we have spoken about it enough and today, I am thrilled and also very curious because that is what drives us and gives us pleasure in our work — being on tenterhooks,” he said. “Galliano is an artist who deserves his place and I think he will have more openness and freedom to express his sensitivity and his talent.”

OTB noted the appointment of a “visionary, non-conformist” talent would give “significance to the iconoclastic heritage of Margiela, and new impulse to its exciting future.”

The appointment of a star designer like Galliano also suggests that Rosso is keen to bring more attention to Margiela — and willing to risk a possible backlash.

Galliano was not immediately available for comment.

According to retailers, Margiela management has put the development focus on its secondary line MM6 in recent years as buzz faded around its top lines.

Rosso’s OTB swept in and bought a majority stake in Margiela in 2002, one of series of acquisitions aimed at building a multibrand Italian group. More recent investments include Viktor & Rolf and Marni.

At the time of Margiela’s 20th-anniversary fashion show in Paris in 2009, the founder had gradually reduced his day-to-day involvement in the company, working mainly on special products, including the house’s first fragrance under license with beauty giant L’Oréal.

While long cloaked in mystery and steeped in conceptual high-mindedness, Margiela ultimately took on a more commercial bent following the Rosso investment, opening boutiques in more established neighborhoods, expanding its offer of accessories and branching out into lifestyle categories such as home decor.

Market sources estimate the company generates about 100 million euros annually, or $126 million at current exchange. It operates about 50 directly owned stores.

Upon Margiela’s final exit, the company explored the possibility of naming a new creative director, with Raf Simons and Haider Ackermann among those approached.

FT : Coty eyes Chanel’s Bourjois

Coty eyes Chanel’s Bourjois

Coty, the fragrance and beauty group also owns nail polish brand Sally Hansen.
Coty, whose brands include Rimmel, Calvin Klein and Davidoff, has made a binding offer to Chanel for its cosmetics brand Bourjois, in an all-share deal that would extend the US beauty company’s international expansion efforts.
Chanel has been offered 15m Coty shares, worth around $240m, for the ‘masstige’ colour cosmetics group, which is sold in 50 countries. ‘Masstige’, a portmanteau of ‘mass’ and ‘prestige’, is a term used to describe an increasingly critical sector of the luxury industry that offers premium products at accessible price points to mid-market consumers.

Coty and rivals L’Oréal and Estee Lauder have been scrambling to consolidate their foothold within the space to capitalise on the squeezed middle in mature markets trading down from higher-end brands, while emerging markets spawn a booming middle class keen to make entry level luxury purchases.
“We intend to examine the offer in more detail and enter constructive talks with Coty,” said Chanel. The privately held French luxury group would own approximately 14 per cent of Coty’s Class A shares, or 4 per cent of Coty’s total equity, which would give it a voting stake of less than 1 per cent.
The bid is the latest move by Coty to rebalance its portfolio and product mix to better capitalise on growth opportunities within the global beauty market. Its attempts to date have met with mixed success.
After it failed to buy door-to-door cosmetics seller Avon in 2012 for more than $10bn, the company launched an initial public offering to build a war chest for acquisitions and international expansion. But the $1bn IPO in June last year has failed to excite investors. Coty shares traded at $16.22 on Tuesday, down from the $17.50 IPO offer price.
“This offer for Bourjois is no surprise. Like Elizabeth Arden, Coty is a company that has a great deal of exposure to the weaker product lines and distribution channels of the beauty market, including personality-driven cosmetics and struggling US retailers like Walmart and Target,” said Rahul Sharma, an analyst at Neev Capital.
“Shareholders are acutely aware of these shortcomings. The focus now will be boosting its prime beauty brands portfolio, avoiding duplication and streamlining retail operations across markets.”
The spending power of a booming middle class in emerging markets continues to hold allure for Coty, despite headaches involved with its $400m acquisition of a stake in Chinese skincare brand TJoy in 2010. In February Coty and Avon unveiled a plan to sell Coty fragrances through Avon’s sales representatives in Brazil.
Bart Becht, Coty chairman and interim chief executive, said the acquisition of Bourjois would help the company reach new consumers in western Europe, where it is one of the market leaders, as well as the Middle East and Asia.
“We are looking forward to having the Bourjois brand as part of our portfolio of leading beauty products, as well as welcoming Chanel as a Coty shareholder,” Mr Becht said.
Mr Becht took the helm last month after the abrupt departure of Michele Scannavini, who left citing personal reasons. It marked the second change at the top in a little over two years. Bernd Beetz, Coty’s long-time chief, stepped down in 2012, about eight months after Mr Becht became chairman, and took a position in the spotlight in the public battle to acquire Avon.

>>> Rio Tinto confirms that no discussions are taking place with Glencore

Rio Tinto confirms that no discussions are taking place with Glencore (GLNCY)

Co's Board notes the recent press speculation regarding a possible combination of Rio Tinto and Glencore. The Rio Tinto board confirms that no discussions are taking place with Glencore.

* In July 2014, Glencore contacted Rio Tinto regarding a potential merger of Rio Tinto and Glencore. The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto's shareholders.
* The board's rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter.
* Rio Tinto remains focused on the successful execution of its strategy, which the board of Rio Tinto is confident will continue to deliver significant and sustainable value for shareholders.

(ZH) Bundesbank Blasts Draghi's QE, Fears "Monetary Policy Is Hostage To Pol

Bundesbank Blasts Draghi's QE, Fears "Monetary Policy Is Hostage To Politics"
"The concept of an independent central bank clearly focused on price stability is neither old-fashioned nor outdated," exclaimed Bundesbank head Jens Weidmann. As The WSJ reports, he criticized the European Central Bank’s decision to buy private-sector bonds and signaled his fierce opposition to purchasing government bonds, underscoring his reluctance to back additional stimulus measures to combat weakness in the eurozone economy. "There is a risk of monetary policy, especially in the euro area, being held hostage by politics," Mr. Weidmann said

 

In an interview with The Wall Street Journal, Mr. Weidmann rejected calls from the International Monetary Fund and within the ECB for Germany to cut taxes or ramp up public spending despite mounting signs that its economy is succumbing to Europe’s downturn. The European Commission should consider rejecting France’s 2015 budget, which exceeds deficit targets mandated by the European Union, he added.

 

Mr. Weidmann said he stands by the conservative principles that have characterized the Bundesbank throughout its nearly 60-year history: keeping inflation low; protecting the central bank’s balance sheet from risks and strict separation from the financial needs of governments.

 

His cautious stance stands in contrast with the ECB’s latest attempts to convince investors that it will act forcefully to boost the flow of money to the economy, and may raise doubts about the bank’s ability to gain the consensus needed to do still more expansive steps if needed. It also exposes the deep rifts that still mar the Eurozone, with countries including France and Italy calling for more flexibility while Germany insists on fiscal rigor.

 

“There is a risk of monetary policy, especially in the euro area, being held hostage by politics,” Mr. Weidmann said in an interview Monday at the Bundesbank’s headquarters in Frankfurt, just a few kilometers away from the ECB.

 

...

 

Although buying bonds in financial markets isn’t forbidden, “the ECB’s mandate is more narrowly limited than that of central banks in other currency areas,” Mr. Weidmann said, referring to rules preventing the ECB from financing governments.

 

"These concerns are particularly acute whenever the central bank buys specifically the most risky sovereign bonds,” he said. Besides, with government and corporate borrowing costs already super low, such a policy would have limited effect. Tying fiscal policies together through ECB bond purchases “is a dangerous path,” he said.
But it's not just the Germans...
On Tuesday the Dutch central bank delivered its own critique of ECB policies, warning in its semi-annual report that that easy-money policies could cause financial instability and fuel asset bubbles. “The medicine should not become worse than the disease,” it said.
Finally, Weidmann notes,
“Against the background of the announced target for the balance sheet, I see a risk that we will overpay for these assets,”
Of course the ECB will get stuck with low-quality loans purchased at inflated prices! Economic logic makes this a certainty. If the institutions selling such loans could get as high a price in the open market as the ECB will offer, they would sell them now. This program is nothing more than a back door bailout to politically connected, privileged, special interest groups. It is corruption on a grand scale. Of course the ECB has a good role model–the US Federal Reserve Bank.
*  *  *

(ZH) Deutsche Bank's Shocking Admission: "QE In Europe Will Be Ineffective"V

Deutsche Bank's Shocking Admission: "QE In Europe Will Be Ineffective"Via Deutsche Bank's George Saravelos,

Euroglut: a new phase of global imbalances

This report argues that both “secular stagnation” and “normalization” are incomplete frameworks for understanding the post-crisis world. Instead, “Euroglut” – the global imbalance created by Europe’s massive current account surplus will be the defining variable for the rest of this decade. Euroglut implies three things: a significantly weaker euro (we forecast 0.95 in EUR/USD by end-2017), low long-end yields and exceptionally flat global yield curves, and ongoing inflows into “good” EM assets. In other words, we expect Europe’s huge excess savings combined with aggressive ECB easing to lead to some of the largest capital outflows in the history of financial markets.
Introducing Euroglut
The dust is settling on the Global Financial Crisis, and markets are now focusing on the future. One prominent line of thinking is that the new normal is "secular stagnation" - weak trend growth and very low neutral rates. Another view is that "normalization" is around the corner - growth will soon return, and policy will inevitably normalize faster, particularly in the US. In this piece, we argue that both the "normalization" and "secular stagnation" frameworks are incomplete. Instead, it is Europe's huge savings glut - what we call euroglut - that will drive global trends for the foreseeable future. While euroglut seems similar to "secular stagnation", the asset price conclusions are very different and far more powerful.
What is Euroglut?
Euroglut is a global imbalances problem. It refers to the lack of European domestic demand caused by the Eurozone crisis.

 

The clearest evidence of Euroglut is Europe's high unemployment rate combined with a record current account surplus. Both are a reflection of the same problem: an excess of savings over investment opportunities. Euroglut is special for one and only reason: it is very, very big. At around 400bn USD each year, Europe's current account surplus is bigger than China's in the 2000s.

 

If sustained, it would be the largest surplus ever generated in the history of global financial markets. This matters.
Domestic policy implications
A domestic implication of euroglut is that FX weakening will not be an effective policy response. Does the euro-area need an even bigger trade surplus? Europe faces a problem of domestic, not external demand. The global environment is hardly conducive to export-led growth either. Japan has engineered a close to 50% appreciation in USD/JPY yet exports have failed to recover.1 This lack of FX responsiveness does not mean that the ECB doesn't care. Absent fiscal policy or other "animal spirit"-boosting initiatives, there is very little left for the central bank than to push yields and the currency lower. QE in Europe will be ineffective, but it will happen anyway - it is the only tool the ECB has to protect its mandate.
Global impact
Euroglut means that as the world's biggest savers, Europeans will drive international capital flow trends for the rest of this decade. Europe will become the 21st century's largest capital exporter. This statement is close to an accounting identity - a surplus on the current account implies capital outflows elsewhere. Our premise is that the next few years will mark the beginning of very large European purchases of foreign assets. The ECB plays a fundamental role here: by pushing down real yields and creating a domestic "asset shortage", it is incentivizing European reach for yield abroad. 3 Think about policy over the next few years: at least 500bn-1trio of excess cash will be sitting in European bank accounts "earning" a negative rate of 20bps. In the meantime, asset-purchases will drive yields down across the board – there will be nothing with yield left to buy. The asset implications are huge:
1. Currency weakness. As equity, fixed income and FDI outflows pick up, the euro should face broad-based weakening pressure. Our end-2017 forecast for EUR/USD is 95cents.

 

2. Very flat fixed income curves. What will Europeans buy? With the US Treasury - bund yield spread at record highs, US fixed income should be a primary beneficiary of European demand. "Secular stagnation" implies a low terminal Fed rate resulting in low long-end yields. "Euroglut" suggests that the level of neutral Fed funds doesn't matter. If there is sufficient demand for longdated instruments, the US 10-yr yield could easily trade below terminal Fed funds. It happened during the 2000s "bond conundrum", it is even more likely now - global imbalances are bigger.

 

3. Good EM could survive. The Global Financial Crisis has seen a rotation of current account surpluses away from EM to Europe. At face value, this makes EM more vulnerable. But the sum of countries' current account surpluses is larger now than before 2008, so there is more spare capital around. European current account recycling should mean that the marginal demand for EM assets is likely to go up, not down.
Beyond the Eurozone
Just like China's surplus drove most Asia policy in the 2000s, Euroglut will drive policy across Europe. Two economies are already imposing currency floors to fight off euro weakness (Switzerland and Czech Republic) and one more has imposed negative rates (Denmark). Scandinavia, Switzerland and the CE3 economies are likely to face continued pressure to ease more. All these countries are running current account surpluses, meaning the potential for European capital outflows is even larger. We could see an amplification of Euroglut: most of the European continent could end up with negative rates or FX managed-regimes.
Conclusion
"Secular stagnation" and "normalization" rely on views around trend growth but ignore global imbalances. It is these that remain the most important feature of the global financial system. Europe is the new China, and via large demand for foreign assets, it will play a dominant role in driving global asset price trends for the remainder of this decade.

>>> US Close Dow -1,60% S&P -1,52% Nasdaq -1,56% Russell -1,67%

Closing Market Summary: Cyclical Sectors Pace Broad Retreat

The stock market ended the Tuesday session on the lows after spending the entire day in negative territory. The Russell 2000 led the way, sliding 1.7%, while the S&P 500 lost 1.5% with all ten sectors ending in the red.

Equity indices were pressured from the start with the early weakness being attributed to a disappointing Industrial Production report from Germany (-4.0%; expected -1.5%), which represented the largest drop in activity in almost six years. Growth concerns were also on the mind of IMF economists as the Fund lowered its 2015 global growth forecast to 3.8% from 4.0%.

Fittingly, the macroeconomic worries weighed on most cyclical sectors, while energy (-1.3%) tried to withstand the broad pressure. The sector, which lost 3.8% last week, displayed modest intraday strength, but slumped in the afternoon amid a noteworthy drop in crude prices (-1.7% to $88.81/bbl).

Elsewhere among cyclical sectors, the industrial space (-2.4%) spent the bulk of the day at the bottom of the leaderboard. Transports contributed to the weakness, but defense stocks did not fare much better as evidenced by a 2.1% decline in the PHLX Defense Index. As for transports, the Dow Jones Transportation Average lost 2.5% to widen this week's decline to 3.6%.

Other high-growth areas like chipmakers and biotechnology also struggled to keep up with the broader market. The PHLX Semiconductor Index lost 1.9% to extend its month-to-date decline to 5.1% with just five October sessions in the rear-view mirror.

For its part, the biotech group slumped at the open, halved its loss by midday, but returned to lows before the close. The iShares Nasdaq Biotechnology ETF (IBB 266.62, -5.10) lost 1.9%, while the health care sector (-1.6%) ended among the laggards.

Meanwhile, the remaining countercyclical sectors displayed slimmer losses than the broader market with utilities (-0.1%) registering the smallest decline.

Generally speaking, today's retreat reflected big picture concerns, thus putting corporate-specific developments on the backburner. To that latter point, Sodastream (SODA 21.52, -6.05) plunged 21.9% after guiding Q3 results well below analyst estimates. On a similar note, AGCO Corporation (AGCO 42.13, -4.97) sank 10.6% after priming the market for disappointing results.

The broad retreat fueled increased demand for volatility protection, sending the CBOE Volatility Index (VIX 17.21, +1.75) to its highest close since mid-March.

The safe-haven demand underpinned Treasuries with the 10-yr note (+21/32) spending the entire day in a steady rally. As a result, the benchmark yield fell eight basis points to 2.34%.

Today's participation was ahead of average with more than 770 million shares changing hands at the NYSE.

Economic data was limited to JOLTS and Consumer Credit:
  • The Job Openings and Labor Turnover Survey for August indicated job opening increased to 4.835 million from 4.605 million 
  • Consumer credit increased by $13.50 billion in August, down from a downwardly revised $21.60 billion (from $26.00 billion) in July, while the consensus expected an increase of $20.00 billion 
Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET, while the minutes from the Sept 17 FOMC meeting will be released at 14:00 ET.
  • Nasdaq Composite +5.0% YTD 
  • S&P 500 +4.7% YTD 
  • Dow Jones Industrial Average +0.9% YTD 
  • Russell 2000 -7.5% YTD

>>> Fed's Kocherlakota: Declining unemployment level is not alone a reason to ra

Fed's Kocherlakota: Declining unemployment level is not alone a reason to raise rates, see no reason to remove 'considerable time period' from the Fed statement - remarks to reporters 
- Reason to raise rates would be to head off higher inflation and rising wages, neither of which are a concern right now
- Do not see financial stability concerns as a material concern at the moment 
- Would only want to raise rates if there were an expectation for inflation to increase to 2% within one or two year time period
- Impact of the stronger USD on the economy is very modest

(BFW) Fed’s Dudley: Mid-2015 Lift-off Is ‘Reasonable View to Me’


Fed’s Dudley: Mid-2015 Lift-off Is ‘Reasonable View to Me’
2014-10-07 19:00:00.18 GMT


By Vivien Lou Chen
Oct. 7 (Bloomberg) -- Lift-off in 2015 would be “something
to be very excited about,” would signal economy is healthier,
and “would be very good news even if it were to cause a bump or
two in financial markets,” NY Fed President William Dudley
said.
* Lift-off date will depend on economic data and outlook,
Dudley said in speech in Troy, N.Y.
* Consensus expectation for mid-2015 “seems like a
reasonable view to me”
* Timing could be moved earlier or later depending on
whether economy improves or disappoints
* Timing could be moved earlier or later depending on
whether economy improves or disappoints</li></ul>
* “It still is premature to begin to raise rates,” given
labor market slack and low inflation
* “Significant underutilization of labor market
resources” remains
* “Significant underutilization of labor market
resources” remains</li></ul>
* Forecasts for U.S. growth of ~3% in 2H and 2015 “seem quite
reasonable to me”
* Some headwinds have subsided; fiscal restraint is likely
to disappear next yr, while credit availability has
improved
* Some headwinds have subsided; fiscal restraint is likely
to disappear next yr, while credit availability has
improved</li></ul>
* “Some meaningful chance” that growth will be weaker or
stronger than forecast; “likelihood that growth will be
substantially stronger” than forecast “is probably
relatively low”
* Consumer spending isn’t as strong as one might expect,
households also have higher-than-normal levels of saving
* Stimulus from consumer durable goods cycle is likely to
weaken going forward, sales of light vehicles unlikely
to keep growing at rate of past few yrs
* Stimulus from consumer durable goods cycle is likely to
weaken going forward, sales of light vehicles unlikely
to keep growing at rate of past few yrs</li></ul>
* Stronger USD, due partly to increasing confidence in U.S.
growth prospects, limits upside risk to forecast
* Housing also has less upside risks than might be expected;
“nothing on the horizon” that would soon change low levels
of starts, mortgage constraints
* “Great deal of uncertainty” around future path of
unemployment
* Fed will monitor participation rate; rate “could” rise
again, yet less confident than before
* Fed will monitor participation rate; rate “could” rise
again, yet less confident than before</li></ul>
* CBO’s forecast for core PCE deflator rising to 1.9% by 4Q
2015 from 1.5% in 2Q of this yr is “quite reasonable”
* Risk is that inflation increases more slowly than
forecast; appreciating USD, weaker foreign growth
prospects could act to damp inflation pressure
* “Quite confident” expectations will remain well
anchored
* “Quite confident” expectations will remain well
anchored</li></ul>
* NOTE: Dudley is only Fed president with permanent vote on
policy, has never dissented on FOMC decision


For Related News and Information:
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To contact the reporter on this story:
Vivien Lou Chen in San Francisco at +1-415-617-7078 or
vchen1@bloomberg.net
To contact the editors responsible for this story:
James Holloway at +1-212-617-4454 or
jholloway8@bloomberg.net
Greg Chang