Goldman Now Thinks "The Economy Might Start To Overheat Unless Growth Slows From The Current Pace"

Remember when a month ago Goldman "called it" on the question whether there would be a rate hike in 2015, when, in response to the rhetorical question of "What is your own view of the appropriate liftoff date?" chief economist Jan Hatzius said the following:

A: Our own answer to that question has long been 2016. In fact, our own view is similar to that of Chicago Fed President Charles Evans, who recently shifted his call from early 2016 to mid-2016. Although it is definitely possible to rationalize a December 2015 liftoff using various forms of the Taylor rule, there are two good reasons to delay the move longer. First, the risk of hiking too early is bigger than the risk of hiking too late when inflation is so far below target and we have spent so much time stuck at the zero bound. Second, we have seen a sizeable tightening of financial conditions. At this point, our “GSFCI Taylor rule” suggests that the FOMC should be trying to ease rather than tighten financial conditions. Our own view in terms of optimal policy is quite strongly in favor of waiting well into 2016.

Well, the gambit worked and while the "rate hike delay thesis" sent markets soaring in October on one after another piece of bad news as "bad news was good news", the tables have now turned, and following the "stellar" October jobs report, it is time to attempt "good news is good news" for a change, and engage in the most hypocritical game of revisionist history, and pitch a rate hike as the bullish catalyst this economy has needed all along - because if only the Fed has raised rates in 2009 instead of engaging in QE2, Twist, QE3 and keeping ZIRP until now, the middle class would be thriving... just ignore the S&P at 2100.

So here comes Goldman, not two months after it said that the Fed should think about easing, with what can only pass for Sunday evening humor saying that 7 years to the day after it landed on the zero bound on December 16, 2008, the Fed will hike because, "the economy might start to overheat by late 2016/early 2017 unless growth slows from the current pace".

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