A Giddy Wall Street (And Maxine Waters) Praises The New Fed Chairwoman
Today 3:00 pm nomination by Obama of Janet Yellen as the next Fed chair was hardly news (certainly wasn't news to stocks which briefly dipped below their 200 DMA) in the aftermath of Larry Summers' self-elimination, but nonetheless the sellside brigade was quick to praise her now official nomination for one simple reason: it means more of the same Bernanke policies that have done nothing to benefit broad America, but more importantly have resulted in year after year of near-record Wall Street bonuses, and unprecedented asset bubbles. Why shouldn't the banks then be giddy with excitement that the status quo will not only continue, but the monthly $85 billion in liquidity may in fact increase in time? Below is a selection, courtesy of Bloomberg, of the most vocal praises sung on behalf of the former San Fran Fed president byt the numerous banks that currently exist only thanks to the Fed's actions in 2008.
- FOMC hawk voices to affect rates moves less going forward as Yellen appointment maintains view of dovish Fed for longer
- FOMC minutes from Sept. 17-18 meeting expected to be broadly balanced between hawks, doves
David Kotok, CIO, Cumberland Advisors Inc
- Yellen nomination likely to be greeted well by mkt agents
- “Market-calming” effect to be short-lived * Yellen to proceed slowly on any taper policy
FBR Capital Markets
- Yellen nomination is “as close to a sure bet as it comes” and makes it likely current accommodative monetary policies of Fed will continue
- Expect some Republican opposition due to Yellen’s support of current Fed policies; sees near-universal Democratic support
- Yellen “optimal control approach” is one reason to expect a late Fed exit with the first funds rate hike in early 2016
- “Republicans risk alienating women if they get too aggressive” trying to block Yellen nomination
- Yellen “very qualified,” would be first female Fed chairman
- Yellen may offer Feb. “surprise,” cut QE more than expected as early as end-Jan. in response to views she’s inflation dove
Jim O’Neill, former chairman of GSAM, Bloomberg View columnist
- Yellen means more dovish Fed policy at the margin, “unless there’s some surprise jump in inflation expectations”
- “I would imagine for the rest of the world, and particularly the beaten-up emerging world, it’s kind of good news”
- USD may weaken if FOMC minutes today show structural shift transition toward a more dovish “Yellen Fed”
- FOMC minutes take on extra significance today
And as a bonus, here is Li Daokui, former People’s Bank of China academic adviser. He does not sound quite as excited as the other praise singers for the simple reason that Yellen's ongoing crushing of the dollar means that the pegged Chinese currency will continue to appreciate if only in USD-relative terms.
appointments will lead to “prolonged period of appreciation” for the
yuan because of a “relatively longer period” of expansionary U.S.
- Yuan to appreciate 1% by end-2013
Finally, perhaps confirming "all you need to know" here is Maxine Waters.
Congresswoman Maxine Waters (D-LA), Ranking Member of the House Financial Services Committee, released the following statement in anticipation of the nomination of Janet Yellen as Chairman of the Board of Governors of the Federal Reserve.
“President Obama’s choice in nominating Janet Yellen to lead the Fed is both historic and important for our nation’s economy. Ms. Yellen’s experience as a former Chair of the Council of Economic Advisers, Regional Fed Bank President, and Vice-Chair of the Federal Reserve make her one of the most people ever to be nominated.
Ms. Yellen has demonstrated a unique understanding of the impact of the Federal Reserve’s policies on the middle class, particularly the crucial balance between stable prices and low unemployment. During the crisis, she advocated for the urgent need to implement financial reform quickly in order to avoid another meltdown. As Chair, I am hopeful that Ms. Yellen will continue to push for policies that address the still unacceptably high rate of unemployment.
Over the past several years, we have seen Ms. Yellen’s judgment on the economy validated time and again. Because predictions about the future strongly impact Fed policies, this is crucially important. When many economists were optimistic about unprecedented growth in the economy – she saw the bubble for what it was and predicted disaster in the banking system.
In addition to her impeccable qualifications, her institutional knowledge and working relationships with current Board members would provide for a smooth transition at a critical time for the U.S. economy.
In the interest of stability at this critical time for our economy, I urge the Senate to quickly confirm Ms. Yellen.”
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