DB’s Lavorgia Says Fed is Naive to Hope for 2015 Rate Hike

Stock markets are rallying because investors believe the Federal Reserve has their backs after last week’s disappointing jobs report, Deutsche Bank’s Joseph LaVorgna said Monday.

Central bankers are essentially stuck now that investors are expecting the Fed to keep its benchmark federal funds rate near zero in the face of weaker labor market data, he said.

“The Fed is very naïve to believe that it could actually raise rates if the market is not discounting it,” Deutsche’s chief U.S. economist told “Squawk on the Street.”

Earlier Monday, Komal Sri-Kumar, president of Sri-Kumar Global Strategies, told CNBC’s “Squawk Box” an interest rate hike at a time when investors are not expecting one could result in a “major shock” because investors would have to reverse their positions.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza