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Wall Street's Take On Jackson Hole: "Yellen Was Not Dovish Enough"

Tyler Durden's picture




 

Confused by what Janet Yellen said? As it turns out, so is everyone else, where the prevailing sentiment across the sell-side analysts was that Yellen was not dovish enough. Then again, with expectations bordering on Yellen giving the "BTFATH" green light, there is no way she was not going to disappoint...

First, and foremost, we start with the firm whose former employee runs the operational branch, i.e., the New York office, of the Fed, Goldman Sachs:

Goldman (Jan Hatzius):

  • We think the tone from Chair Yellen's Jackson Hole speech was broadly balanced, perhaps slightly more so than in past speeches.
  • She noted both the more rapid-than-expected pace of recent labor market improvement, as well the still-significant level of labor underutilization.
  • She continued to emphasize the "dashboard" approach to assessing the state of the labor market, while at the same time stressing uncertainties in determining exactly how much slack remains in labor markets and how price and wage developments should be interpreted.

And the rest of the sell-side, via Bloomberg:

Barclays (Michael Gapen)

  • Don’t see Yellen core views as having changed but rather see shift in tone as “normal evolution” as Fed is closer to achieving dual mandate
  • Discussion on wages signals Fed not looking for 3-4% wage growth as precondition to raise rates
  • Maintain view first rate hike to come in June 2015

Scotiabank (Guy Haselmann)

  • Yellen’s speech “was very balanced,” seemed more ambiguous about how much slack there is in U.S. economy
  • “She had more confidence about the amount of slack in the economy before, and today she admitted that it is difficult to gauge. So the speech was a bit less dovish than expectations”

Deutsche Bank (Alan Ruskin)

  • Very balanced nature of Yellen speech a disappointment to those who expected her to live up to dovish reputation
  • Surprised by more hawkish tone on wages; seemed reluctant to use soft real wages as gauge of labor market slack
  • “This was not a speech from a policy maker who was making a strong argument to ‘wait and see the whites of the eyes of inflation’ before reacting”

Brean (Russ Certo)

  • Yellen’s speech hints at “tightening faster” rather than later
  • “My takeaway is that she used to think there was X% of slack in the labor force,” now has revised her estimates “so we now have less than X%”

GMP (Adrian Miller)

  • Yellen “not dovish enough,” bond investors having  “modest temper tantrum”
  • Nod to troubles measuring slack “could be considered somewhat more hawkish than her previous firmer views”

Capital Economics (Paul Dales)

  • Yellen doesn’t seem to have changed view there’s still “significant” slack in labor market
  • If FOMC minutes signaled Fed was 2 steps closer to hiking rates, Yellen’s speech could be seen as taking one step back

CRT (Ian Lyngen)

  • Yellen seems more comfortable with idea that some of labor market utilization may be structural as well as cyclical

Renaissance Macro (Neil Dutta)

  • There’s risk of earlier rate increases, given uncertainty cited by Yellen on conditions that will gave way to rising wages and what that means for inflation
  • Even so, markets are very confident that speed, end- point of tightening cycle will be “slow and low” and that Fed will start in mid-to-late 2015
  • “In some respects, the markets continue to ignore Yellen”

* * *

The irony, of course, is that all of the above are simply conusing what Yellen said with something totally different, namely the market's reaction to headlines out of the Ukraine. But in the New Normal nothing really matters or makes sense any more.

 

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Fri, 08/22/2014 - 12:26 | 5130060 Cognitive Dissonance
Cognitive Dissonance's picture

Moar Kool-Aid over here please. We want MOAR!

<Don't make me angry. You'll regret it.>

Fri, 08/22/2014 - 12:33 | 5130098 flacon
flacon's picture

A whole lot of words... saying nothing. What does this mean: "broadly balanced, perhaps slightly more so than in past speeches"? Just what does that mean? It can mean anything or nothing at all. 

Fri, 08/22/2014 - 12:37 | 5130121 nope-1004
nope-1004's picture

I see slack.  I hear slack, never tasted it though.  Hey Slackers - cut me some slack.

There.  Can I be Fed ChairMAN?

 

Fri, 08/22/2014 - 12:42 | 5130143 john39
john39's picture

didn't she wink, and say, 'don't you worry now wall street, mama fed, er belgium, got you some QE coming"....

Fri, 08/22/2014 - 12:51 | 5130181 nink
nink's picture

I bet you 2 Billion Dollars everything will be ok http://www.thedailysheeple.com/a-repeat-of-black-wednesday-soros-bets-2-...

Fri, 08/22/2014 - 13:21 | 5130348 El Oregonian
El Oregonian's picture

"When you think it's a market, but it's not. It's all wrong". Sung to that 60's jingle for that fake-butter margarine Chiffon "When you think it's butter but it's not" it's Chiffon.

https://www.youtube.com/watch?v=LLrTPrp-fW8

Fri, 08/22/2014 - 12:41 | 5130125 Cognitive Dissonance
Cognitive Dissonance's picture

The art of selling 'nothing' is to convince you it is not only 'something', but something of great value. That way you bypass the question of "Is it real" and proceed directly to "I want".

<Central Banking Salesmanship 101>

Fri, 08/22/2014 - 12:56 | 5130193 carbonmutant
carbonmutant's picture

Marketing no longer sells the product they sell the experience...

Fri, 08/22/2014 - 13:17 | 5130327 Cognitive Dissonance
Cognitive Dissonance's picture

Sell the sizzle, not the steak.

Fri, 08/22/2014 - 12:58 | 5130226 SheepDog-One
SheepDog-One's picture

I laughed when I read that word salad too! Bunch of nonsense...then the computers analyze every word like old mystics reading goat entrails.

Fri, 08/22/2014 - 12:43 | 5130149 JRobby
JRobby's picture

We want MOAR FREE MONEY you fat slob!

Comply Immediately!!!!!

(this has been a public service announcement from your National Bank Association)

Fri, 08/22/2014 - 12:44 | 5130152 Bloppy
Bloppy's picture

Bubblecult stocks all higher- NFLX now at $475- it's a freakshow

Elsewhere, Glenn Beck decides he's no longer conservative:

http://tinyurl.com/pxakwg3


Fri, 08/22/2014 - 12:56 | 5130210 SheepDog-One
SheepDog-One's picture

Glenn Beck knows better than most not to bite the handlers who picked him up in drug rehab and keep his heroin flowin.

Fri, 08/22/2014 - 12:27 | 5130063 clade7
clade7's picture

Goddamn!  Any more 'Dovish' and she'd be a chikadee!

Fri, 08/22/2014 - 15:30 | 5130114 HardlyZero
HardlyZero's picture

Yellen didn't put out.

Deflated markets.

Now we deal with the angst.

FED needs moar, moar, moar....fluffer.

Maybe get a tag-team going with Christine Leg-arde.

Fri, 08/22/2014 - 12:26 | 5130064 Bill of Rights
Bill of Rights's picture

As if none of the above didn't have a per-screening script...

Fri, 08/22/2014 - 12:28 | 5130068 dontgoforit
dontgoforit's picture

Holy moly, they talk like politicians.

Fri, 08/22/2014 - 12:29 | 5130074 NOTW777
NOTW777's picture

LOL not dovish enough - years and years of trillions gushing out of the huge Fed pipe to the big banks - they are all drunk on QE and floating while the average person is left high and dry

Fri, 08/22/2014 - 12:45 | 5130155 JRobby
JRobby's picture

Tripping balls on QE

Fri, 08/22/2014 - 12:29 | 5130077 NOTaREALmerican
NOTaREALmerican's picture

Golly, it's just like when Greenspan used to say nothing.  Can we start calling Janet "The Mystro" yet? 

Fri, 08/22/2014 - 15:33 | 5131124 HardlyZero
HardlyZero's picture

She needs a shroud and a large glowing ball to look into, as she strokes her fingers over it and peers deep inside.  She is a perfect fit.

It might stimulate something as the world economy heads into Babylon.

Fri, 08/22/2014 - 12:31 | 5130083 Yen Cross
Yen Cross's picture

    These clowns could make pouring a glass of water like building a hydrogen fuel cell...

Fri, 08/22/2014 - 12:31 | 5130085 LawsofPhysics
LawsofPhysics's picture

Translation;  Where's our monetary heroin, we don't care who's ass you have to take it out of Janet!!!

Fri, 08/22/2014 - 12:31 | 5130087 NOTW777
NOTW777's picture

liberals destroying our country also need moar $

 

http://www.nationaljournal.com/politics/the-boys-of-summer-july-s-bigges...

Fri, 08/22/2014 - 12:34 | 5130101 NOTaREALmerican
NOTaREALmerican's picture

Just the (D)umbasses are destroying the country?  Not the (R)etards?

Fri, 08/22/2014 - 12:52 | 5130175 saveUSsavers
saveUSsavers's picture

Obama is the MOST CORPORATIST Dem in fking history, WTF are you spoutin, NOT?

Fri, 08/22/2014 - 14:43 | 5130825 Tall Tom
Tall Tom's picture

It is just the same old Red Team/Blue Team bullshit.

 

Maybe he will wake the fuck up and understand that THERE IS NO DIFFERENCE BETWEEN THE REPUBLICANS AND DEMOCRATS.

 

If he is too lame to see that after the REPUBLICAN LEAD HOUSE OF REPRESENTATIVES FUNDED OBAMACARE LAST OCTOBER then if he just another lost and deluded Prole.

 

Maybe he will fuckin' wake up. Maybe.

Fri, 08/22/2014 - 12:33 | 5130096 Dr. Engali
Dr. Engali's picture

Get it right next time old Yeller! You know where your bread is buttered.

Fri, 08/22/2014 - 12:35 | 5130102 walküre
walküre's picture

Sell signal. The rally has officially ended just like in 2008. Bad juju on the street of walls everywhere!

Yellen can't raise rates as much as she can't dictate higher wages.

Mid-term election market crash. It is predictable.

Fri, 08/22/2014 - 12:40 | 5130133 Dr. Engali
Dr. Engali's picture

Wrong, no crash without a major false flag first.

Fri, 08/22/2014 - 13:17 | 5130331 walküre
walküre's picture

take your pick of the CIA created litter

Fri, 08/22/2014 - 12:46 | 5130161 RattNRoll
RattNRoll's picture

The fed will blame first, no crash (robbery) until it goes viral.

Fri, 08/22/2014 - 12:34 | 5130107 Itchy and Scratchy
Itchy and Scratchy's picture

She didn't even tighten her sphinkter!

Fri, 08/22/2014 - 12:34 | 5130108 i_call_you_my_base
i_call_you_my_base's picture

To me, this is what a loss of CB credibility looks like. No one believes they will raise rates.

Fri, 08/22/2014 - 12:36 | 5130112 Tjeff1
Tjeff1's picture

Nasdaq thinks she was plenty dovesh-sky

Fri, 08/22/2014 - 12:35 | 5130113 tradewithdave
tradewithdave's picture

So... you can taper a ponzi? Hmmm. That's why Missouri is the "show me" state. The Fed's now in a state of shome.... Think of it as an Indian Reservation where you don't need an App like Open Table. There's no going "off the reservation" without going off entirely. Cue Economist Mag "money as a technology" meme.

Fri, 08/22/2014 - 12:40 | 5130140 DavidC
DavidC's picture

Meanwhile the NASDAQ is climbing again...
Russell up on the day.
S&P and Dow heading back to unchanged.

DavidC

Fri, 08/22/2014 - 12:45 | 5130156 NOTaREALmerican
NOTaREALmerican's picture

Well, the strength of the DowBuck is based on the full faith and credit of the Federal Reserve.  

You can buy a nice car for only 2 DowBucks now. 

Fri, 08/22/2014 - 16:26 | 5131407 Haager
Haager's picture

What can possibly go wrong? Markets (and all analysts) expected a more dovish tone, so Yellen must have misspoken here. That's because the marktets are always right...

Fri, 08/22/2014 - 12:42 | 5130141 GooseShtepping Moron
GooseShtepping Moron's picture

I'll reiterate what I wrote yesterday, as it seems to be the case. Not only that, it makes good sense for Yellen to talk diplomatically to the markets while independently pursuing a course of tightening.

I will go out on a limb here and predict that Yellen will act hawkish, but there's no reason she has to telegraph that fact to the world. She won't say anything to spook the markets, but QE will still end and interest rates will still rise.

 

I believe Yellen knows that the employment target is BS anyway and that right now it serves mainly as a means to make the Fed into the scapegoat for Congressional and Presidential policy failure. Therefore Yellen will quietly let QE end, quietly let the employment target be reached, and then say to Congress, "I did my job. It's your problem now."

 

She does not want the economic profession to be maligned for what is essentially a failure of political leadership, and she is right.

Fri, 08/22/2014 - 13:06 | 5130271 LawsofPhysics
LawsofPhysics's picture

I don't think you can put this all on "political leadership" when the politicians are puppets for the banks.

now about those derivatives...

http://www.cbc.ca/player/News/ID/2492785815/

 

Fri, 08/22/2014 - 12:44 | 5130151 SoDamnMad
SoDamnMad's picture

Dr. Engali

You want a false flag. I give you a false flag and a little bit Moar.

V. Putin  (remember it's Friday. I got all weekend and I already bought my Puts)

Fri, 08/22/2014 - 13:18 | 5130341 Dr. Engali
Dr. Engali's picture

Good luck with that. BTW, no where in my post does it say that I want a false flag. It's justa statement about how the real world works.

Fri, 08/22/2014 - 12:48 | 5130167 Seasmoke
Seasmoke's picture

It's just like selling AIR.

Fri, 08/22/2014 - 12:51 | 5130180 yogibear
yogibear's picture

You need air. The Fed wishes to control air.

Fri, 08/22/2014 - 12:53 | 5130172 Atomizer
Atomizer's picture

Fuck you Central Planning, the gravy train is over. I could of followed suit in acquiring shit at ZIRP. I did the opposite, payed everything in cash. Fuck sticks like yourself have no morals.

The only loser in the game is you. Why? I cut out the banking middle man collecting projected interest payments to white wash ledger bookings. 

Raise the interest rate to 7%. Watch the freeloaders howl. 

Fri, 08/22/2014 - 12:51 | 5130184 SheepDog-One
SheepDog-One's picture

So what Wall St is really irked about is the headlines weren't planned properly for most efficient market skimming....they got caught long I guess.

Fri, 08/22/2014 - 12:53 | 5130196 himaroid
himaroid's picture

THEY KNOW NOTHING! NOTHING! (drool)

Fri, 08/22/2014 - 12:56 | 5130207 Atomizer
Atomizer's picture

Too be fleeced and unite .

/sarc

Fri, 08/22/2014 - 13:09 | 5130281 Atomizer
Atomizer's picture

Forbes will print a article about how they lost 70% of American Millionaire's over Federal Reserve decision to increase rates. 

/hahahahaahaa, you really cannot make up this shite.

 

Fri, 08/22/2014 - 13:49 | 5130511 The Phallic Crusader
The Phallic Crusader's picture

oh for godness sake, this is a woman who lost the plot decades ago.  This is sophistry - financial quackery. She has no fucking idea what is going on, or why, or what to do about it.

 

Just count on Fischer doing what he can to steer the ship into the iceberg in such a way as to help those nearest and dearest to his heart.  He is an arch-criminal, and likely calling the shots.

 

Be nice to have the NSA wire on his ass...

Fri, 08/22/2014 - 14:43 | 5130816 Hohum
Hohum's picture

I need to know: What's Joe LaVorgna think?

Fri, 08/22/2014 - 14:49 | 5130876 Tall Tom
Tall Tom's picture

Raise those Interest Rates to 5% tomorrow.

 

If you cannot do that I will be happy with a Percentage Point for starts...TODAY.

Fri, 08/22/2014 - 15:37 | 5131160 HardlyZero
HardlyZero's picture

FED waiting for the Draghi effect, post-effect, and Monday (after this Ukraine weekend).  Then FED will dial it in....hopefully sooner than later.

Fri, 08/22/2014 - 16:15 | 5131349 Who was that ma...
Who was that masked man's picture

Fuck Wall Street.

Fri, 08/22/2014 - 23:35 | 5133199 Otrader
Otrader's picture

Will this make the Jr. bankers salary increase only 24%? 

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