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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Cognitive Dissonance's picture

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

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

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. 

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?


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"....

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.


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>

carbonmutant's picture

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

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.

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)

Bloppy's picture

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

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


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.

clade7's picture

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

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.

Bill of Rights's picture

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

dontgoforit's picture

Holy moly, they talk like politicians.

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

NOTaREALmerican's picture

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

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.

Yen Cross's picture

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

LawsofPhysics's picture

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

NOTaREALmerican's picture

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

saveUSsavers's picture

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

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.

Dr. Engali's picture

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

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.

Dr. Engali's picture

Wrong, no crash without a major false flag first.

walküre's picture

take your pick of the CIA created litter

RattNRoll's picture

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

Itchy and Scratchy's picture

She didn't even tighten her sphinkter!

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.

Tjeff1's picture

Nasdaq thinks she was plenty dovesh-sky

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.

DavidC's picture

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


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. 

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...

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.

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...



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)

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.

Seasmoke's picture

It's just like selling AIR.

yogibear's picture

You need air. The Fed wishes to control air.

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. 

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.

himaroid's picture


Atomizer's picture

Too be fleeced and unite .


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.