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Janet Yellen's J-Hole Speech: Slack Remains, QE Is Over, Rates Could Rise Sooner (Or Later)
Simply put, as Citi noted, unless Fed head Janet Yellen goes full-dovish, risk assets face tremendous downside potential. As ConvergEx's Nick Colas notes, Yellen receives a "B" grade from financial professionals, fewer than half (49%) of those surveyed approve of the job the Federal Reserve is doing. A clear majority (59%) of respondents describe the Fed as being "behind the curve" with respect to interest rates. Despite better-than-expected data whereever one looks in the US (apart from wages and housing), any hint of seni-dovish, or contingent dovish... or heaven forbid hawkish comments and the massive consensus trade that the Yellen Put has an ever-increasing strike price will fall rapidly by the wayside... though Draghi could come in later and save the day. With S&P so close to 2000, we suspect any hint of word 'slack' and algos will run stops and USDJPY will break 104.
Pre-Yellen: S&P Futs 1986, 10Y 2.407%, JPY 103.77, Gold $1278, Oil $93.35
- *YELLEN: LABOR MARKET HASN'T FULLY RECOVERED EVEN AMID JOB GAINS
- *YELLEN SAYS THERE'S `NO SIMPLE RECIPE' FOR APPROPRIATE POLICY
- *YELLEN: FOMC SHIFTING TO QUESTIONS ON LEVEL OF JOB-MARKET SLACK
- *YELLEN SAYS GAUGING LABOR-MKT SLACK NEEDS TO BE `MORE NUANCED'
- *YELLEN REITERATES ASSET BUYING TO BE COMPLETED IN OCTOBER
- *YELLEN SAYS ASSESSMENT OF SLACK DEPENDS ON RANGE OF VARIABLES
- *YELLEN SAYS FASTER PROGRESS ON GOALS MAY BRING RATE RISE SOONER
- *YELLEN SAYS SLOWER PROGRESS ON GOALS MAY DELAY RATE INCREASE
- *YELLEN COMMENTS AT FED CONFERENCE IN JACKSON HOLE, WYOMING
- *YELLEN SAYS FOMC SEES SIGNIFICANT UNDER-USE OF LABOR RESOURCES
We are unsure if there is a live feed (due to start at 10amET) - click image for link to live Feed from Bloomberg if there is one.
The full Yellen wordcloud:
Full Statement (link):
* * *
BACKGROUND...
As Deutsche's Jim Reid notes,
Chair to provide us with an updated assessment on the infamous ‘Yellen dashboard’ in evaluating the ongoing labour market slack and how they have yet to normalise relative to 2002-2007 levels. Some of these alternative measures she monitors include duration of unemployment, quit rate in JOLTS data, labour force participation etc. Any sound bite that touches on the debate of cyclical versus structural drivers of labour force participation will also be closely followed. Unlike some of the previous Jackson Hole symposiums, this is likely not one that will serve as a precursor of any monetary policy changes but the tone of Yellen's speech may still have a market impact and set the mood for busier times ahead in September. Given markets are seemingly expecting nothing but another dovish display from Yellen the risk is perhaps skewed to the other side.
And ConvergEx shows even the pros are in doubt...
- ConvergEx Group Survey Finds Less Than Half of Respondents Approve of Job the Fed is Doing
- Two-Thirds of Respondents Say Central Bank Has Too Much Influence On Markets
- Financial Professionals Name Paul Volcker As Best Federal Reserve Chairman Of All Time
"The financial industry likes Janet Yellen but believes she leads a central bank that is overexposed and behind the curve," said Nicholas Colas, ConvergEx Group chief market strategist. "There's tangible fear among investment professionals about the unwinding of Quantitative Easing and the painful increases in rates that will follow. Our survey shows that Ms. Yellen is seen as a strong leader, and investors don't want to scrap the structure of the Fed, but there is real concern about what happens next."
As we noted previously, expectations are extremely high...
‘Full dovish’ means moving the goal posts on the targets. Keeping the current targets, even accompanied by rhetoric and optimism, is hawkish because it suggests that normalization is coming as well get closer to the targets.
There are three ways by which Yellen can express dovishness, but only one that breaks new ground:
i) Full dovish
1) Argue that the natural rate is less than 5 ¼ - 5 ½ %
2) Advocate for a temporary overshoot of the inflation target
3) Emphasize the uncertainty around NAIRU estimates that tightening can wait till there is real evidence of accelerating inflation.
4) Introduce a soft wage target of about 3.5%, consistent with aspirational 1.5% productivity growth and 2% unit labor cost growth
ii) Semi dovish
1) Make the case that there is no sustained inflation likely without accelerating wage growth and there is little broad evidence for such a pickup, but keep existing inflation and unemployment targets
2) Introduce a new labor market indicator that captures the slack she feels that the unemployment rate misses, but again keep to existing targets
iii) Contingent dovish
1) Forecasting a pickup in productivity and labor force participation that will limit the need for tightening
Full dovish goes beyond anything she has stated explicitly in her comments. It would give stimulus more room on unemployment, inflation or both, and lead to yields dropping even further, taking the USD with them. There are straightforward arguments to justify full dovish, but the Chair has not advocated any of them so far, so it would clearly plant her among the most committed doves.
Semi dovish may generate a strong initial market reaction if it looks as if it is introducing new factors into the policy equation but is much more ambiguous. 'Low wages imply low inflation' is a property of most inflation models but much weaker than saying that wage growth is now a target. Were inflation to pick up for others reasons the Fed would still tighten, even if wages remained soft. Similarly it is unclear what it means to say that the unemployment rate understates slack, but 5 ¼ - 5 ½% is the target anyway. While we would focus on whether the goalposts are being shifted, semi dovish can sound very dovish until it becomes clear whether there is any functional shift in the FOMC’s goals.
Contingent dovish is the argument she has put forward for a long time. It sounds more dovish than it is because no one has a real handle on the drivers of trend productivity growth and the US supply side has disappointed badly. Both the participation rate and productivity growth are at weak levels and there is no compelling case that either will pick up. The safest assumption is that trend productivity growth over the next three years is what it was the last three years, and that participation rates are unlikely to surge.
* * *
Were she simply to say that the targets are the targets and they will begin to reduce stimulus as they are approached, it would be a tremendous let down and viewed as very hawkish versus expectations.
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one Minute in and "0" Comments.. WTF?
Helicopters, printers and zirp, oh my.
Asset purchases to go to zero in one month. And, oh, by the way, Belgium to continue buying at 80 billion a month, for the forseeable future. Just a coincidence, really. No idea where Belgium gets that kind of money. Must be the chocolate. But anyway, that's the plan.
This has nothing to do with the article...but...I saw a Hillary 2016 bumper sticker in the Chicago area yesterday. WHAT THE FUCK??? WE ARE SCREWED!!!
Ja-Yo's J-hole speech looks to be uber-bullish full on retard sister fucking for the market.... Just listen to cocophony of pundits on CNBC and their uber-boner view on the bull market.
They have no f'n clue what they are doing and are too scared to speak the truth. This bad movie is getting boring. Default looms on this giant ponzi and they know it.
Default looms? Perhaps Default has already occurred, the rest are False Narratives, Propaganda, PsyOp & Politcial Therater with these Psycopaths.
The Restructureing is occuring as we speak. Least you forget these NWO Scum Fucks have decades & Century plans well in advance.
Default does not loom because the second it does they print.
Germany style collapse followed by Germany style fascism looms.
yaaawwwwwwwwwwnn.......suck it janet.
Stop worrying about Hitlary. She has no elite backing and she is toast. My biggest concern is that I may have to see pictures of that kankleasarous on the beach again.
"Stop worrying about Hitlary."
I hope you are right. But it still remains, if someone is dumb enough to support Hillary for POTUS, they will support someone else who is just as bad. Elections aren't going to change anything.
It's the morons you have to worry about. Plenty of them ready to vote for bloody progessive murderers like Hillary.
Grimaldus
Well Obama already said that he's backing Indian Chief Warren. She's already setting up the BS meme that she will fix the Banking system, kinda like Obama fixed the Healthcare system. If there is any progressive that's even more full of shit than Barry, it's Warren.
http://nypost.com/2014/07/06/this-means-warren-obama-backs-challenger-to...
What? She's lifetime CIA, and her supporters despise Obummer for the last selection, so she already has a support base to put any other candidate to shame.
As for the elite, they are only interested in who can fool the greater amount of the sheeple, hence her having to stand-down the last time, as the Magic Negro mesmerized the world. Otherwise, they could give two fucks as to who holds the office, just as long as POTUS can provide plausible cover for their activities.
The idea that she is toast is red/blue team fodder for the upcoming horse race. It also protects her from attacks on her record/character for as long as possible (which is her only real danger concerning the sheeple).
Hopefully next time she hits the beach, she'll have a harpoon in her side and dozens of Japanese sailors screaming "Fuck you dolphin, Fuck you Whale"
"Hillary 2016 bumper sticker in the Chicago area yesterday"
So, what tyoe of body armour do you own. Just curious. Looking for recs.
J-Hole 2014
"Pulling the Plug"
Why not Iran? Or Syria? Now either one of those would be consistent with the jugeared jackass. Toss in the City of Ferguson and it's a triple play .
Um, on Janet Yellen's resume.....is there any indication of actual work experience?
You know...a job like the little people have (well, used to have)?
She is an established insider, who took part in the selling of our gold with the guy next to her, Robert Rubin. Rubin is a complete fascist and banker thug. They both belong in prison along with Bernocchio.
Its not Belgium, Its EUROCLEAR.
Basically the FED's "primary dealers" on Wall Street are secretly buying treasuries via EUROCLEAR based in Belgium.
So instead of loaning out that QE money to Main Street to help the economy, the banks are secretly buying more treasuries.
Its all one giant full circle ponzi scheme !!
Talk about hitting the J-spot....
Jack Hole
You misspelled A-Hole in that headline.
How does she get "Hon." in front of her name anyway?
A few card tricks and they are ready for a fucking coronation these days.
Its short for "Honey"
Lots of words. NO meaning
"we still have no clue how the real world works, or how businesses run. we've never been part of the economy outside of academia."
RE: "we still have no clue how the real world works, or how businesses run. we've never been part of the economy outside of academia."
They know exactly what they are doing. They are stealing wealth. They are very good at it.
When does the part happen where everything drops and they buy up property at pennies on the dollar? Too bad life isn't like Trading Places and we could have Eddie Murphy yell something about the orange crop on the trading floor and mess up all their plans.
I know how my local community works, I try to trade in assets that are not FRN's I have a mutual understanding with the person I am dealing with and build a trust with them, THAT is what is coming soon to a city\town near you.
(best to start now....)
oh and don't forget the security, either have it, or pay for it....
Yup, all bollocks.
DavidC
Disciples of "Alan the Great" aka "faucet man"
Lots of words, ALL CODE. Get out your Bablfish translator, to translate Clingon into English.
Uhura, what'd she say?
If I applied this terminology to any other industry I would be out on the street with a begging bowl. What a load of meaningless nonsense
Shes speaking out of her A-Hole....
QE is over ??? OMG what will that do to tresuries?? Will tiny Belgium be able to pick up the slack ??
the fed already owns the bond market. yields will be fine.
No worries, new volume of EUR could fix the glitch of their USD toxic holdings.
Yes, tiny little Belgium is the ace in the hole for Mr BernYellin....
Was she Yellen all this or just like using her normal voice?
rates will continue their downward trend and we will see the ten year yielding below 1%.
1% on a $18+ TRILLION DOLLAR NATIONAL DEBT !!
That is exactly why we will see the ten year drop below 1%. Bread may cost $10.00 a loaf, but .gov can continue to service the debt.
How about looking at what happened the last times QE ended. Risk off ensued...every time. And the scared money flowed into Treasuries...every time.
QE is not over.
http://www.newyorkfed.org/markets/tot_operation_schedule.html
Back to derivatives - The Exchange with Amanda Lang - CBC Player
Must watch
Powerful conversation, taking no prisoners (including mentioning the "bought and paid for Congress" and that Tavakoli's former boss, Bill Broekschmidt, was recently found hanged)
Clearly gold must be hammer-fucked by this news.....
That is good, thanks, and only 6:29 - worth the watch.
$700 Trillion in derivatives, $7 Trillion traded daily (which was the entire market in 1990).
And people think the house of cards fell down in 2008-2009, oh boy.
nice link.
What did she say? Doesn´t matter, buy stawks, the plunge protection team is on your side.
tol ya so, next draghi saves the day
there is nothing draghi can practically do though. He needs to hope the usd stays strong and drives the euro down... that will help a lot.
Logic has nothing to do with it.
Wage increases that don't bring inflation? My, My, what they learn in an Ivory towered wonderland. Must have slept through the lecture on cost-push eh? And this is the person in charge? geeeeeze.
Here comes your prosperity......
I am reading some tea leaves that tell me it's S & P 2000 today.
With this crowd you have to watch what they DO, not what they SAY!
And the market loves it - she could have talked about her favorite TV show, or why she prefers Coke to Pepsi and the market would have loved it.
Market probably would have loved a cardboard cut-out of Yellen.
Seeing all this love for that old hag we can clearly state the depth of pervertness of the markets.
Zerohedge sucks the big one. Let the panic begin!
Yellen: "It's great to be running the world's greatest counterfeit operation, with the world's biggest army to back it up. Bully-ish!"
Is the QE Lifestyle having a Trickle-Down effect on you yet? No? Just wait some more, the Trickle-On effect will follow.
Who said "gobbledegook"? That was a great call.
She said slack!!!! She's a discordian!
(and by the way, TL, that is not a pipe)
Sounds to me like "if you like your interest rates, you can keep your interest rates." It will probably work about as well as it did for my health insurance plan...
No better day to put on shorts. I would say around the time Europe closes
I wouldn't front run Draghi. we already knew where old Yeller stood. It's all about the dragqueen will Q or not now.
Upcoming US elections guarantee QE?
its all fucking bullshit.
did anyone actually think this fucking nasty cunt would come out and say something to upset the ''markets''?
what is this, like the 10th up day in the last 11, and the one down day was only due to a stupid rumor about ukraine and all the losses that day were pretty much recovered.
there is no market, there is only the fed, and they will never fucking let this shit end.
Isn't it more about what Dragqueen will say at this point?
now for the markets. the fed must be buying like crazy cause up it starts. I really don't get it but a 12 the pentagon talks. wonder if we bomb Syria today. ISIS threatens to deliver another body. how PM are down is beyond me but 12:00 will tell
So is Janet, in so many words, calling the BLS liars?
all I got from Janet's comments is: "my hair is white...am a bit over-weight and my slacks are black" ....and we waited a week for this crap....lolll....I think that the next time the guillotines are brought back, the condemned ought to be facing upwards!
As long as the world keeps viewing us as the "tallest midget in the room" or the "cleanest dirty shirt" we will keep on this exact course.... why change??
The day that perception shifts and they start selling the US.... LOOK OUT BELOW...!!!!
With people like this at the helm, we are in SO much trouble.
The linkage of monetary policy to jobs is suspect in my view. The only clear effect of excessively easy monetary policy is to create excessive asset price inflation which, once overvalued, becomes a source of risk to jobs and economy in and of itself.
Yellen's statement in two sentences:
"Nobody cares about the Federal Reserve any longer.
Go ask Congress and White House if you want to know what is going to happen."
That's true for this administration, the big question is the next. Although, Europe is in a bad situation, one day Germany will say enough and half of europe will be without a lifeboat. That could be sooner than the admin change in 2 years.
But you are right, its all about what the white house wants right now, doing God's work.
C'mon Janet, prime at 6% and an end to QE starting Monday.
Yellen thinks we should print more money, hmm thats original.
I'm buying October atm QQQ puts. This SPX 2000 will probably turn out to be the inflection point, but I'm done waiting. F*ck Yellen and the Fed.
Look at the markets today and think about it, It's not allowed to move logically react to 'fundamentals' - Until PPT and HFT fail.
Putin rules the day. Buy any dip in tbonds. Use profits for ammo.
An appropriate setting for the biggest collection of jack-holes on the planet.
They have learned words are much more important than action. Until one day, it all sounds like Charlie Brown's teacher.
POMO is over.
For now.
Yep. Just like the Iraq was over a few weeks ago.
Must be an error, as I don't see "steal," "theft," or "rob" in that word cloud.
An American, not US subject.
Long live POMO!!!
Arrest Janet Yellen for crimes of financial terrorism. End the FED.
"Guillotine the Fed!"
An American, not US subject.
The bag of dog food we buy is 50% the size of what it was in 2008 for the same price. No inflation. Nope none at all
You have had to resort to eating dog food? Things are indeed bad.
All this analysis and hand-wringing by grown adults over the empty words of a fucking cunt.
If this is what it has come to, does anyone in "the market" stop to think: maybe its all bullshit?
Live Feed
https://www.youtube.com/watch?v=V8u5UfpunNI
The FED speak is directly attacking slack. It's open warfare now, and they are not even trying to cover it up.
http://subgenius.wikia.com/wiki/Slack
S&P 2000 essentially matches the rise from the 1980s to 2000 bubble peak off the 2009 lows. The 2008 peak matched the 2000 bubble.
Since the markets don't trade based on any real business metric, theymust trade on chart bullshit amd mathematical formulas.
The market hit a bubble high in 2000, retested that high in 2008, then went on a relentless surge to test a new high based on the 20ish year bull market from 82-2000.
Needless to say that the algos squeezed 20 years of market growth into 6, but that is what happens when the Fed feeds the market with fake money. We also got 20 years of inflation squeezed into six.
Looking at a chart without any care for real economic analysis, the market needs a huge drop to the 2009 lows or below to set up another massive run.
Since the algos have already ran through the 1980-2000 bull market the programs will need to pull back to find another massive run to pattern after. The other massive bull market in the pattern is the post WWII run, which would perhaps put the next top around 6000ish.
Its bullshit, but that is the market. With the computers running the show you could expect the next crash to only last six months and run 5500 points in two years. Wouldn't be any less fake or manipulated than the current market.
"Since the markets don't trade based on any real business metric, theymust trade on chart bullshit amd mathematical formulas."
Say WHAT???? I DARE you!!! Go ahead,,,say it again. "Since the markets don't trade based on any real business metric, theymust trade on chart bullshit amd mathematical formulas."
Ok, you got it right. Now whatcha gonna do???
"Looking at a chart without any care for real economic analysis, the market needs a huge drop to the 2009 lows or below to set up another massive run."
My, my,,, THAT would 'be so, #1', IF,,,IF,,, the charts weren't running on a 'mathamatical formula'. So your conclusions are in 'error'. Sounds good tho if you were on TEEVEE... lol. They are totally clueless, like most traders.
Keep trying. I did.
BTFREACHAROUNDBELGIUMQEPOMO
Dovish = horse fly circling a pile of dung...
It's not difficult. Stock prices are at risk, yields will remain low for the foreseeable future, and to expect negative nominal rates.
They will never stop printing that is what they have done for 100 years.
All i heard was white noise, then I got a nosebleed. Seems pretty much par for the course when this cunt is talking.
Narcissistic Lier Translation:
Congress should raise the minimum wage effectively generating sufficient tax revenues to significantly lessen the amount of support required by monitary policies without punishing large corporations who have most of their employees offshore and who contribute the vast amount of pollitical financiing.
AKA: arranging the deckchairs on the Titanic
It's estimated that only %5 of the previous LTRO was actually used by European banks for loans to businesses. Banks used the money to fund carry related activities and buy bonds. This 'Targeted-LTRO' doesn't make banks pay penalties for the same investing schemes. It just makes them pay back the money sooner if they don't reach certain lending threshholds by a certain time. It's just more gasoline for the bond and equity market fire.
The European banks still have not been recapitalized after the GFC, and Europe has little quality collateral. I seriously doubt Draghi will make any major policy shifts, and will JAWBONE us to death. Additionally, the ECB seems to have the Euro(rise) under control for now.
If these fuckers hear the words "game over" they shit and piss themselves flopping in the corner like suffocating fish.
These are our world leaders.
It is as absurd as the "Nights That Say Ni" skit, but no where near as funny.
The A-Holes in J-Hole!
Can someone name me a place that once they start stimilus can stop?
Fuck you, Mr. Yellen.
More JY Jelly.
Under-use of labor resources. Why? Because of Fed policy. Rates should have never hit 0% and they certainly should have been raised years ago. Of course that would mean hookers and blow wouldn't be every night for the bankers and D.C. And then the U.S. government would have to cut spending dramatically to service their debt.
Fuck the Fed. Fuck central banks.
if the fed lies about EVERYTHING maybe they are lying about asset buying ending.
they could either 1) simply change to QE4 in november
or 2) engage in shadow asset purchasing through shadow channels. perhaps a myseterous buyer in brussels will buy 80 billion a month, essentially some slush fund covered up so the fed can pump the market indefinitely
the annoying voiced peter schiff is only right about one thing, that in the long run they can never stop printing. and, i will add, if and when they stop in the short run, they will make money from that too.
Fed raising rates. HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
I'm not finished laughing: HAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHAH
Janet, immediately hike the rates to 7%. We need more parasites committing Robin Williams syndrome.
What? Can't afford your 36 million dollar home, go hang yourself. These people today remind me of yuppies from the 80's. All illusion and not a pot to piss in.
shhhh, did you hear that, that noise...what was that?
YellenTurtle eats some lettuce.
Yellin: " Don't worry I'm on the pill, trust me"
Why October? Because elections are in November and they need to hold a gun to someone's head.