Bill Dudley

"Several Participants Pointed Out The Elevated Level Of Equity Values"

"... during the discussion, several participants commented on a few developments, including potential overvaluation in the market for CRE, the elevated level of equity values relative to expected earnings, and the incentives for investors to reach for yield in an environment of continued low interest rates."

Goldman: The Last Two Times P/E Multiples Expanded This Much, The Result Was A Historic Crash

"The current P/E expansion cycle is now one of the largest in history. Since September 2011, S&P 500 forward P/E has grown by 75% (from 10x to 18x). This expansion has only been surpassed twice since 1976, when the multiple rose by 111% from 1984-1987 (ending with the 22% Black Monday collapse) and by 115% from 1994-1999 (ending with the Tech Bubble pop)." - Goldman Sachs

Futures Spike After Bill Dudley Urges "Cautious Approach" As "Balance Of Risks Tilted To Downside"

Caution is called for because of Fed’s limited ability to reduce policy rate, Federal Reserve Bank of New York President William Dudley says, Dudley comments in text of speech in Bridgeport, CT. “Although the downside risks have diminished since earlier in the year, I still judge the balance of risks to my inflation and growth outlooks to be tilted slightly to the downside

Former Fed Employee Avoids Jail, Gets $2,000 Fine For Stealing Fed Secrets On Behalf Of Goldman Sachs

Jason Gross was the latest former banker to make a mockery of the US judicial system when he was spared prison on Wednesday, for stealing NY Fed secrets on behalf of Goldman Sachs. Instead Gross, 37, was fined $2,000 by U.S. Magistrate Judge Gabriel Gorenstein in Manhattan and sentenced to a year of probation with 200 hours of community service after pleading guilty to a misdemeanor charge of theft of government property.

Don't Show Bill Dudley This Chart

The Fed's Bill Dudley just unleashed the most cognitively dissonant statement of his career. That superlative is highlighted by theses two headlines:

DUDLEY SAYS U.S. ECONOMY IS IN QUITE GOOD SHAPE
DUDLEY: DON'T SEE NEGATIVE RATES HAVING 'BIG CONSEQUENCE'

Try telling The BoJ's Kuroda that!!

Crunch Time?

It seems monetary policy is exhausted and the next exogenous lever to pull would be political fiscal initiatives. If/when they fail to stimulate demand, there would be only one avenue left – currency devaluation. If/when confidence in the mightiest currency wanes, we would expect the US dollar to be devalued too - not against other fiat currencies, but against a relatively scarce Fed asset.

How The Fed Unwittingly Confirmed A Recession And A Default Cycle Are Now Inevitable

In the fourth quarter, lending standards tightened for the second consecutive quarter.  This is problematic because as DB's Jim Reid writes, two consecutive quarters of tightening standards "has never happened before without it signalling an eventual move into recession and a notable default cycle. Once we have 2 such quarters lending standards don't net loosen again until the start of the next cycle."