Yellen spoke.
The market listened and interpreted. Result: stocks, bonds, gold and oil are up as investors apparently focused on a particular point she made: "future policy makers may wish to explore the possibility of purchasing a broader range of assets."
For direction starved investors this means the U.S. dollar is low man out as the dollar weakened. A weaker dollar buoys bonds driving yields most likely lower in an already yield-famished world and intensifying the hunt for higher dividend paying equities. Emerging markets beware. Gold initially fell before turning around, up 1.5%, once traders fully digested Yellen's remarks. Recall a few days ago someone dumped a chunk of gold on the market sinking the price several dollars an ounce.
What was that all about, just taking profits and seeking better entry point? Expecting a stronger dollar and higher interest rates or was it a politically motivated trade to keep the fiat wheel of fortune turning through early November?
Though most agree it was a more hawkish speech than usual, Yellen, per her style, parsed her words enough to leave room for her usual splash of ambiguity. The usual excuse for lack of clarity is fear of spooking the market. After seven long years of spooking markets, this is a gross understatement.
On the contrary, it may turned into the old investors hear what they want to hear scenario. But the truth is the Fed has less and less wiggle room and that ups the ante that whatever they do will be a mistake. Once again, however, you read, you interpret and you decide.
The essence of her talk settled on four points:
1. Argument for rate hikes stronger in recent months
2. Gradual increases in rates appropriate
3. No longer focusing on inflation and nominal GDP targets
4. Economy approaching Fed's goals on employment and stale prices
Many of the points are still debatable. Much of the data suggests a recession is already here.
Can anyone spell of smell the term desperate. Here is a blurb from mishtalk.com.
Here are the last four quarters of GDP.
No Confidence
Despite wanting the hike, a Yellen slide from the Jackson Hole symposium shows the Fed has little confidence that it will hike.
For details please see Yellen Discusses “Tools”: She’s 70% Confident That Rates will Be between 0 and 4.5% in 2018.
Mike “Mish” Shedlock
The market listened and interpreted. Result: stocks, bonds, gold and oil are up as investors apparently focused on a particular point she made: "future policy makers may wish to explore the possibility of purchasing a broader range of assets."
What was that all about, just taking profits and seeking better entry point? Expecting a stronger dollar and higher interest rates or was it a politically motivated trade to keep the fiat wheel of fortune turning through early November?
Though most agree it was a more hawkish speech than usual, Yellen, per her style, parsed her words enough to leave room for her usual splash of ambiguity. The usual excuse for lack of clarity is fear of spooking the market. After seven long years of spooking markets, this is a gross understatement.
On the contrary, it may turned into the old investors hear what they want to hear scenario. But the truth is the Fed has less and less wiggle room and that ups the ante that whatever they do will be a mistake. Once again, however, you read, you interpret and you decide.
The essence of her talk settled on four points:
1. Argument for rate hikes stronger in recent months
2. Gradual increases in rates appropriate
3. No longer focusing on inflation and nominal GDP targets
4. Economy approaching Fed's goals on employment and stale prices
Many of the points are still debatable. Much of the data suggests a recession is already here.
Can anyone spell of smell the term desperate. Here is a blurb from mishtalk.com.
Here are the last four quarters of GDP.
- 3rd Quarter 2015: 2.0%
- 4th Quarter 2015: 0.9%
- 1st Quarter 2016: 0.8%
- 2nd Quarter 2016: 1.1%
No Confidence
Despite wanting the hike, a Yellen slide from the Jackson Hole symposium shows the Fed has little confidence that it will hike.
For details please see Yellen Discusses “Tools”: She’s 70% Confident That Rates will Be between 0 and 4.5% in 2018.
Mike “Mish” Shedlock
Rate hike odds are dropping...
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