Janet Yellen

It may be hard to believe, but either one of the two status quo choices for U.S. President currently being force-fed down the American public’s throat will be almost unquestionably more imperial and warlike than Barack Obama. The reason is simple. Any society that apathetically stands by as one President after the other tramples on the Constitution will be subject to a litany of increasingly tyrannical, and even insane, leaders. If you still had any doubt, today we learn that Jeb Bush is actively surrounding himself with the exact same people who under the George W. Bush administration, masterminded the terrible tragedy known as the Iraq war.

Fed's Yellen (12/17): "The decline we've seen in oil prices is likely to be, on net, a positive."

Fed's Yellen (02/18): "Persistently low oil prices could dampen the overall expansion of economic activity."

And this is the woman we trust to run the world?

Back in January, the FOMC surprised many when in its statement is noted that in addition to financial it was also keeping tabs on "international developments" making many wonder just whose central bank the Fed is. Why Yellen's obsession with all things international? The answer may lie in Yellen's 2014 calendar, which the WSJ has parsed and found that of her 950 meetings from February to December (one wonders just when does the Fed chair actually do work outside of meeting rooms of course), the Fed chair spent more time conversing with foreign officials (68 meetings) than with members of the White House (51 meetings).

The chorus of companies complaining against the Fed's strong dollar policy just saw one more addition, when moments ago WalMart- which reported better than expected numbers but disappointing guidance - said that "like many other global companies, we faced significant headwinds from currency exchange rate fluctuations."

"The staff report noted valuation pressures in some asset markets. Such pressures were most notable in corporate debt markets, despite some easing in recent months. In addition, valuation pressures appear to be building in the CRE sector, as indicated by rising prices and the easing in lending standards on CRE loans. Finally, the increased role of bond and loan mutual funds, in conjunction with other factors, may have increased the risk that liquidity pressures could emerge in related markets if investor appetite for such assets wanes. The effects on the largest banking firms of the sharp decline in oil prices and developments in foreign exchange markets appeared limited, although other institutions with more concentrated exposures could face strains if oil prices remain at current levels for a prolonged period."

The monetary politburo has every reason to fear Rand Paul’s demand for a “policy audit” of the Fed. An honest one would show that its so-called “independence” has been monumentally abused in a manner which is deeply threatening to both political democracy and capitalist prosperity. Needless to say, we can’t have that audit soon enough. In short, what the nation really needs is not an “independent” Fed, but one that is shackled to a narrow and market-driven liquidity function. The rest of its current remit is nothing more than the self-serving aggrandizement of the apparatchiks who run it; and who have now managed to turn the nation’s vital money and capital markets into dangerous, unstable casinos, and the nations savers into indentured servants of a bloated and wasteful banking system.

As the WSJ noted, the "world’s top finance leaders on Tuesday in effect backed currency depreciation as a tool for promoting growth by signaling strong support for aggressive easy-money policies aimed at boosting the fragile global economy." Spot the person who just realized it's not going to work.

"Conditions in the global economy are clearly abnormal. The policymaker response to those conditions is extraordinary, with minimal focus on an all-out push for higher growth. Instead, the primary focus is on boosting “inflation” with repeated doses of bondbuying, stock-buying and super-low interest rates"

"A trait you'll see among the world's best investors is the willingness -- even desire -- to talk about their mistakes. They analyze what went wrong, why they were mistaken, and how they can learn from their errors so they don't repeat them. Everyone makes mistakes, but they seem to grasp what most of us have a hard time admitting: It's your (and my) fault."

The last time that stocks were strongly disconnected from reality and the US Dollar began to rally hard was 2008.

What Denmark has just done is "back-door QE", because as some forget, there are two ways to push the price of an asset higher (thus pushing its yield lower in the case of a bond): increase demand, which is what conventional QE does when central banks buy bonds, or reduce supply. Which is what Denmark just did by completely cutting off all Treasury issuance "until further notice". As a result, paradoxically, increasingly more speculators are betting that the "Trade of 2015" could be doing precisely the opposite of what the Danish central bank is hoping will happen: i.e., shorting the EURDKK (or going long the DKKEUR) in hopes that when the Danish peg finally does break, it too will result in long Swiss France-type profits.

Funding Markets just called The FOMC's bluff. Policymakers are acting out rational expectations theory or at least how they see it. In other words, their job is not to analyze actual economic conditions, but to condition economic thought toward the end goal. If they convince you that they believe the economy is on track they further believe you will act accordingly (“you” being both investor and economic agent). The more the economy diverges from the “preferred” projection, the more emphatic the cries of “recovery” become. At some point, desperation becomes palpable.

It is my expectation, unless these deflationary trends reverse course in very short order, that if the Fed raises rates it will invoke a fairly negative response from both the markets and economy.  However, I also believe that the Fed understands that we are closer to the next economic recession than not.  For the Federal Reserve, the worst case scenario is being caught with rates at the "zero bound" when that occurs. For this reason, while raising rates will likely spark a potential recession and market correction, from the Fed’s perspective this might be the “lesser of two evils.”

The WTF moment has arrived: the moment when the Chair of the "independent" Fed tells an audience of Democrats, away from the public, just what her plans for monetary policy are in private:

YELLEN TOLD DEMOCRATS NO RATE INCREASE `IMMEDIATELY': SCHUMER

We knew some Fed member would speak today to boost stocks but had no idea it would be Yellen herself.

Since The FOMC's "hawkish" statement, bond yields have utterly cratered as near-record speculative short positioning in bonds unwind the long-end (and worries about international problems - "and readings on financial and international developments"). However, fundamentally speaking, DoubleLine's Jeff Gundlach explains, the Federal Reserve is on the brink of making a big mistake simply put, "if Fed Chair Janet Yellen goes ahead with this plan (to raise rates for 'philosophical reasons'), she runs the risk of having to quickly reverse course and cut interest rates."