House Financial Services Committee
“It is unacceptable, illegal and corrupt for anyone at the Fed to deliver inside information that could provide a financial advantage to the privileged few and lead to the manipulation of financial markets”: Hensarling
Having initially missed its deadline to provide a response to Congress with regard the 2012 leak of FOMC minutes to an external newsletter writer, The Fed reluctantly admitted that none other than Janet Yellen had met with them. Today, however, as The Wall Street Journal reports, The (unaudited) Fed has agreed to furnish a congressional panel with the names of its staffers who had contact with Medley Global Advisors in the months before the leak, “with the understanding that the names will be kept confidential." So we'll happily tell you who leaked it... as long as you don't tell the public. Audit The Fed!!!
Just two weeks ago we pointed out the fact that The Fed had seemingly ignored Congressional demands for details with regard the 2012 FOMC Statement leak. Now we know why they missed the deadline:
*YELLEN SAYS SHE MET WITH MEDLEY GLOBAL ANALYST IN JUNE 2012, SAYS SHE DIDN'T GIVE MEDLEY CONFIDENTIAL INFORMATION
So she met with the analyst that leaked the statement... but didn't say anything? The Justice Department has opened a formal investigation into the FOMC leak (and we suspect sworn testimony coming).
In a stunning shun to Congressional lawmakers, WSJ reports that The Fed has failed to comply with a request that the bank-owned entity identify the individuals who leaked The FOMC Minutes to Medley Global Advisors a day before the official release in October 2012. Rep. Jeb Hensarling sent a letter to Fed Chairwoman Janet Yellen on April 15 asking the Fed to name them by 5 p.m. EDT April 22. The deadline passed without any response by the Fed...
Can't Wait To Read Bernanke's Memoirs? Here Are All The Timeless Statements By The Former Fed ChairmanSubmitted by Tyler Durden on 04/09/2015 16:13 -0400
We know it will be next to impossible to wait until October when this book of toner repair and printer cartridge replacement wisdom comes out, here is a sampling of timeless soundbites by the former Fed Chairman and current blogger, that should be enough to hold readers over.
"When I was chairman, more than one legislator accused me and my colleagues on the Fed’s policy-setting Federal Open Market Committee of “throwing seniors under the bus” (to use the words of one senator) by keeping interest rates low. The legislators were concerned about retirees living off their savings and able to obtain only very low rates of return on those savings. I was concerned about those seniors as well."
- Ben Bernanke first blog post
and more news moving the markets
While this morning's prepared remarks will be the same hodge podge of three-armed economist-speak, we suspect the Q&A will be a little aggressive as Fed Chair Janet Yellen faces The House Financial Services Committee. Having told the markets that "valuations are somewhat higher than normal," and "heightened leverage and weak underwriting terms are close to levels preceding the financial crisis," we are sure the Congressmen (and women) will focus attention on financial stability concerns - as opposed to back-patting celebrations of how well The Fed has done.
Stocks In Holding Pattern Following Blow-Off Top, Oblivious Of Fed's Warning Of "Stretched" ValuationsSubmitted by Tyler Durden on 02/25/2015 08:00 -0400
Following the first of two Janet Yellen testimonies to Congress, the market read between the lines of what the Fed Chairman said when she hinted that "the Fed needs confidence on recovery and inflation before beginning to raise rates" and realized that the case of a June rate hike is suddenly far less realistic than previously expected, as a result not only did we see another blowoff top in stocks to fresh all time highs, a move which sent the USD lower, has pushed the median EV/EBITDA multiple to the mid 11x (!) range and the forward PE to just shy of 18x ironically coming on a day when the Fed itself warned about "stretched" equity valuations, and led to brisk buying of global Treasurys across the board, pushing the 10 Year in the US back under 2%, and due to the global convergence trade (because if the Fed returns to QE, it will be forced to buy up Treasuries not just in the US but around the globe, since net issuance including CBs globally is now negative) and leading to today's German 5 Year bond auction pricing at a negative yield for the first time ever.
It may signal that the ECB and Eurozone are set to embark on a gold accumulation programme. More likely, it is simply a way to bolster confidence in the euro due to increasing doubts about the viability of the single currency.
Fed Chair Yellen will be presenting her semi-annual monetary policy testimony - sometimes called the "Humphrey-Hawkins" testimony - today (Senate Banking Committee) and tomorrow (House Financial Services Committee). She is not expected to stray too far from the most recent FOMC statement's "On the one hand, there is recent strong labor market data; but on the other hand, the broader set of US activity data has not been as robust recently, and the inflation outlook has dimmed," uncertainty. The Q&A will of course contain the most fireworks (if last year's Yellen vs Warren deathmatch is anything to go by). Notably, The Fed will also release its semi-annual Monetary Policy Report (which last year contained the warning "valuation metrics in some sectors do appear substantially stretched.")
Fed Chair Yellen will be presenting her semi-annual monetary policy testimony - sometimes called the "Humphrey-Hawkins" testimony - on Tuesday and Wednesday of this week. Goldman expects Yellen not to stray far from the message of the January FOMC statement and meeting minutes, seeing it unlikely she will preempt the Committee by sending a strong signal on whether "patience" will be removed from the statement at the March meeting. The testimony will probably not be a major market mover. Nonetheless, to the extent there are risks to our "don't rock the boat" expectation, Goldman thinks they are skewed toward a slightly more dovish tilt.
With Greece moving to the, ahem, periphery if only for a few days/hours, this week the US calendar returns to the forefront with Fed Chair Yellen’s semi-annual monetary policy testimony before the Senate Banking Committee tomorrow night and the House Financial Services Committee on Wednesday, which the market will be paying very close attention to for the reconciliation of how the Fed plans to continue on its rate-hiking path despite rapidly deteriorating US macro data that has started 2015 at the worst pace (in terms of downside surprises) since Lehman.
If you thought the Greek tragicomedy is over, you ain't seen nothing yet, because despite the so-called Friday agreement, the immediate next step is for Greece to submit its list of reform measures to the Troika, which will almost certainly result in an immediate revulsion in Germany's finance ministry, and lead to another protracted back and forth between the Troika and Greece, which may once again well end with a Grexit, especially if the Greek liquidity situation, where bash is bleeding from both the banks and the state at a record pace, remains unhalted. It is therefore not surprising that the ongoing decline in the EURUSD since the inking of the agreement, and the fact that the pair briefly dipped below 1.13 this morning - over 100 pips below the euphoric rip on Friday - is a clear indication that the market is starting to realize that absolutely nothing is either fixed, or set in stone.
Welcome to the new old normal 'Murica... buy those homes... lever up... spend the HELOC... die a debt serf...