Velocityshares Daily 2X Vix Medium Term (TVIZ)

[gldtimer]

Wow...asking a lot.

About ten years ago I came up with my own modified Taylor Rule which I believe works better than the original Taylor Rule or the Feds modification.

I target factory utilization off or a base line of 80.

I apply a factor (proprietary) for readings above/below 80 and compare it to what actual interest rates are - inflation (core minus food/energy)

All that said I come up with a number as far as the actual Fed FF vs. the theoretical (what rates 'should be') If the actual is above the Fed is restrictive and will contract the equity market, if below then good times lie ahead for equities and junk.

So what do the current number say...

The Fed should have a real interest rate (FF minus inflation) of -.34%

Actual real interest rate is only -.53%'%

This makes the Fed accommodative by a scant +.19%

What the Fed needs to have happen to justify a rate increase would be for the factory utilization to start moving up smartly and or the inflation rate.

To have 'true' spring in the market both capacity utilization and core inflation need to move higher.