This page has been archived and commenting is disabled.
Did Janet Yellen Just Shoot Herself In The Foot, Again
As noted in our overnight wrap, markets have so far reacted very favorably to Yellen's "hawkish" speech, which according to some provides a much needed offset to the FOMC's unhawkish hold from last week.
There are two glaring problems with this assessment: first, as Bloomberg notes citing treasury analyst Marty Mitchell "markets have reacted as if they just received an epiphany although the Fed Chair really didn’t say too much that she hadn’t already said in the post-FOMC press conference, in our opinion."
But the bigger problem is that Yellen just reset the market's expectations, and in fact set the bar for disappointment even higher. As FTN rates strategist Jim Vogel very correctly notes, "financial market risk is calmer this morning, but Yellen actually elevated the stakes with her detailed speech yesterday afternoon."
What does that mean? He explains: "Yellen could be spot on this year but until the hike actually occurs, risk asset volatility veers once again to the upside with respect to US monetary policy."
He adds that "markets already were prepared for one hike this year, just not confident it would happen," and "now that the Chair has spiked the football, it reduces nerves early this fall while setting up a potentially nasty result if the Fed again slows the rate trajectory in the winter."
Remember, the winter is when the US economy has, each of the past two years, dramatically slowed down, so much so that the BEA was forced to introduce a "double" seasonal adjustment to the GDP calculation to "smooth" out the weather contribution. To be sure, with the December rate decision taking place one week before the holiday week, will the Fed risk an adverse reaction just ahead of a most critical week for retailers... especially if there is 6-12 inches of snow outside.
For those confused, here is a simple summary of what is going on:
Yellen aside, Vogel's observes that “today will set a tone for the beginning of next week which sees a long list of critical August and September econ data readings along with quarter-end flows for one of the most perturbed quarters in the last four years (and setting that volatility mark was no small feat)."
Good luck Fed: as we saw yesterday quite conclusively toward the end of Yellen's speech, the pressure of micromanaging the world's biggest economy are clearly catching up to the Fed Chair.
As for what the market really thinks, odd for a December rate hike were 41% just before Yellen's speech. Where are they now? 47%.
»
- 16783 reads
- Printer-friendly version
- Send to friend
- advertisements -
Yellen's job is to lie to keep up the Potemkin front that the US economy is strong and the world should be buying US treasuries that the Chinese are dumping
She should’ve shot herself in the head, instead of the foot. ;-)
Looney
Her mask would have stopped the bullet and if she was to take off the mask prior to shooting herself in the head, she would just die anyways.
https://www.youtube.com/watch?v=Gk8gdVHZu1c
www.liveleak.com/view?i=6a7_1403839406
https://www.youtube.com/watch?v=vn_PSJsl0LQ
Leern inglish fer Xrist's sack: the past tanse of shoot is shat!
She was choking on her lies yesterday during that speech and nearly passed out.
But its all bullish and good for markets today.
Yellen / Nuland / Boehner / Blankfein ----> to continue the big lie in every direction the pressure mounts physically
The word Puppet(s) is moving up in the search engines
With the BS fainting yesterday don't be surprised if this witch turns in her broom and leaves the stage.
The Fed will appoint a hardliner - "the sky is falling and all hell will break loose if we don't get our way" - Chairman.
I don't think it was BS. Just imagine having to tell the lies she does, knowing full well that each and every word could be the trigger to the inevitable collapse of the world "economy."
I'm surprised she hasn't died on the spot from the pressure of the cognitive dissonance she has to endure.
Be careful...
"Everybody sayin' nobody's meaner than the little old lady from Pasadena,
She's the terror of Colorado blvd."
Parked in the rickety old garage is a shiny new Heidelberg printing press.
They're running up oil too. Higher rates should equate to stronger dollar and lower oil!
US markets have followed oil most of the year. Peas in a pod.
It's clear this woman was placed in her role to look liked a dawdling old grandmother who can't be blamed when the whole house of cars comes tumbling down. When it crashes people will say "oh I feel so bad for her. She tried so hard it almost gave her a stroke. She's such a sweet old lady" .
We may have seen Yellen's personal Minsky moment is last night's speech when the light finally came on and she realized that when the history books are written she will be seen as the one in charge when the wheels came off of the gravy train.
I'm certain there are several hundred thousand pissed off people that will be hunting her down for a hanging, the sweet old lady thing will just get her a group ass fucking prior to her hanging.
Goddammit you're being really unfair.
Could you stand the pressure of having in one ear Bill Gross telling you to raise (and automatically crash markets, leaving the shittiest legacy imaginable) and Lloyd Blankfein in the other ear telling you not to, threatening to break your legs (along with size 2 triple wide Yenta pumps), after which either markets will crash anyway or inflation explodes higher & you're seen as hopelessly behind the curve.
I'm stressed about paying my ex-wife's alimony. Imagine what it'd be like to carry around what she has to deal with. Stress for me is reduced however by remembering, thank the good Lord, that I've never been married to Yellen.
I don't feel a bit sorry for her. These are all factors she knew before she took the job. Stress comes along with the job she volunteered to take.
Wasn't she co_Chairman before her recent appointment. She has been party to EVERYTHING.
Reap what you sow .......
Yeah, reap this you sow.
the job that was earmarked for larry summers. she had to fight all out to get the job from larry. obaba wanted that boy badly, it was a big loss when he couldn't get him in.
why did obamas want larry? its pretty fucking obvious---bankster love.
Grandma strategy seems to be working on you ;)
I'm still laughing at the ? had a stoke but Yellen couldn't reach joke from earlier this week.
The first time I actually heard Ms. Yellin speak was at the most recent FOMC. Up until then I didn't realize she's retarded.
As if we aren't all sick of it - here is that tired worn cliche. Just picture Dimon, Blankfein, the Bernank, Bullard, Buffet and a host of your favourites' heads on all the bodies.
Dammit Janet!
There's no way they are going to hike rates and crash the markets just before Christmas. They pretend they want to hike, but they certainly don't want to start a revolution.
Rate hike is circus show. You are right hike rates before holidays, let's just shoot retail sales...right. Rate hike is same BS as "the economy will improve next quarter", it's right around the corner. Everybody buys the con, over and over again.
https://www.youtube.com/watch?v=2urjEixqrzM
All for a quarter of a mother fucking percent!!!! Think about that for a second!!! A quarter of a percent!! LMAO!!
Yep. Goes to show where the collective psyche is at this moment. Capitulation is just around the corner!
Thing is, it is an infinite percentage increase to come off of 0% to any higher level.
Too bad she missed her fukn head.
I have no love for Yellen, but dam .. you gotta give it up for the women. What she has been able to do up to this point is biblical. She will not win in the end, but dam, she is fighting like she will.
What has she done exactly? Rates are just where Bernanke left them.
Yellen is the 9th highest payed person at the fed..think about that for a second. She doesn't even get to choose the bagels at the FOMC meetings. She is a clueless old lady who is in way over her head.
Where's Headbanger? Haven't seen much of him since there wasn't a rate hike last week. It's ok ya mook! Come back and apply a big retroactive /supersarc and it's all good. We miss your gif my friend!
that whole logic is retarded. i get the: if she hikes it means the fed thinks the eCONoME is peachy so rally on garth but if she zirps moar that means not peachy. there is of course the fact that the underlying ecobomy sucks and the fact that the fed is always wrong but whatever floats the maggots' yachts i guess.
Peter Schiff has been more accurate then Yellen on the rate hike call.
Breaking, Breaking, Breaking......
Boner just resigned from CONgress.
Yeah that pricks another one waiting for the groupon ass fuking prior to linching. Run boner run!!!!
Should be bullish Gold too......yet somehow , for a few more days any how, they have manage to put the brakes on it again.
It is clear she has no idea what to do, what to say, or what will happen.
Yellen is a LIAR and FINANCIAL TERRORIST! China's problems have been here for at least a year. HOUSING IS NOT "DEPRESSED" ! She belongs in prison having transferred over $1TRILLION from savers to the top 5% of societies scumbag parasitic speculators.
Greenspan first. Then we can talk about the rest.
What if the Warburgs preferred a hyperinflationary reset? Maybe they'd cached their wealth into real things, expecting them to increase in relative value given a mass preference not to be holding paper assets - including paper central bank assets, a.k.a. cash.
What if the Rothschilds had moved into cash, or perhaps treasuries? And prefered a strengthening currency...a.k.a. deflation?
Or perhaps the Rothschilds, and Warburgs - as both are banking clans - would both prefer an inflationary end result? But the other intelligensia who head the corporatocracy, would prefer a strong currency that can buy resources more cheaply?
Regardless...I hypothesize that the discord in Fed message may indicate discord amongst those holding Puppet-Yellen's strings.
I think they would prefer to just survive whats coming, but I have my doubts that will happen. Yellen and all the whores we see mean little to them, just useless mouth pieces is all, who read their script to the useless eaters, but their day comes quickly now.
Mice who live beneath elephants' feet are wise to understand the collision of elephants, and wise to be able to forecast which way each elephant is trying to go, so as to avoid being stepped on.
This cannot be discord to them, as they damn well know their destructive monetary regimes have no chance at surviving long term, as they eventually undermine everything.
So... they plan out resets in the form of war and social chaos in the grand ole fashion of divide and conquer. Any observed discord is due to the outliers who aren't in the club and won't survive, as they are unwanted competition to be picked clean.
Lehman, it's what's for dinner.
Not good enough. She needs to shoot herself in the head
She lost her place repeatedly reading a script, full of drivel and false promises of a rate hike. The great stupidity is to believe our chosen leaders are either intelligent or capable.
No, the great stupidity is to believe that these tools are "our leaders." As soon as that notion is disposed of, it's quite easy to see exactly how intelligent and/or capable they are at playing the part.
Yellen's weakness appears to be due to the fact that she's not a total psychopath, and retains the tiniest bit of humanity that she can't ignore.
They've become a Bank to serve a gang of corrupt politicians that keep spending on their wars.
http://tarpley.net/
Every week now the Fed has to pop in and act like it is going to raise interest rates, to keep the Stock Market from totally plummeting.
Rememebr when the Fed only showed up to comment on the ecomony once every 6 months and then it was every 3 months, then every month, and now it is every week.
If the market had any kind of health at all they would not need to
pop out the Yellen puppet every week, and so far it has worked to keep the market from absolutely crashing as investors hang on every word the Fed says. These days the term investors that the financial shows talk about are market manipulators and big time day traders, not real buy and hold investors like the people with 401K's.
Of course the Fed always implies it is going to raise rates, but never actually says they are and they never do.
They just change the words of the speech and then let their Wall Street talking heads spin the speech as if it means a rate rise is coming ... except it isn't. All this does is get the swing traders on board for another day or two. And it is amazing at just how much a few words and spin miesters can cause billions to pour in, or pour out of the markets, all hinging on statements alone.... never any action.
So what is the Fed going to do? This is a swing traders dream right now, every week the market tanks and then the Fed puppet comes out and it goes back up for a couple of days, then the rigged economic numbers come out and they even stink, even though they are rigged to look good, so the economy must really be so much more terrible then what the even gloomiest numbers imply.
As soon as the markets stop going up on the Feds lies, that will be the signal that there is no more trust of the system and I'd say main street has been there a long time ago, now the matter is when are the crooks working the system going to bail too.
If she does not raise rates in December all she has tod do shortly after is to say she will raise rates early next year and stock markets will shoot up anothe 3%..
Exactly, but how long can this game go on before everyone knows its all BullShit?
Yellen is the new bag lady.
The other possible explanation of Yellen's falter is that she knows something BIG is about to go down and was having trouble steadying her nerves enough to read the script.
According to Itau BBA:
http://is.gd/XzTkOs
The Big Fear
Thus, Fed announcement day arrived with most equity markets up 5%-10% off the late August lows, commodity prices higher and rates priced for Fed action. The main concern coming into the Fed meeting was not that the Fed would hike; it seemed quite clear that it would not go against virtually the entire global economic policymaking community and raise rates. No, the concern was that the Fed would stand pat and stocks, rather than rally, would sell off.
Lo and behold, that is exactly what happened, and that is why we need to be very, very concerned about how things move from here. It remains unclear whether the equity market reaction to the Fed decision was (hopefully) just a classic case of buy the rumor (no hike) and sell the news, or something much worse, namely that investors might be starting to price in policymakers? loss of control – The Big Fear.
The Big Fear of policymakers losing control has been lurking underneath the global equity market for years, underpinned as markets have been by central bank support. Think of it this way: there are two global growth drivers: China and the US. Recently, the competence of the policymaking community in both countries has been called into question, suggesting a possible loss of faith in policymakers, which if true is very worrisome, thus the Big Fear concept.
Why is the Big Fear so worrisome? It’s simple. If investors lose faith in policymakers and decide that cash or bonds are a better place for their money, then stocks are likely to sell off much further. How much further? One never knows, but maybe asking a few questions might help. First, at what level does the S&P need to be for the Fed to engage in QE 4? Second, what S&P level will be considered cheap (keep in mind 2016 E estimates need to come in sharply)? I don’t know the answer to either question, but it seems reasonable to expect that the S&P would need to go much lower than the 1870 level it bottomed at in late August or the 1830 level of a year ago.
The economic implications of such a sell-off would likely be a US and global recession. Such an environment could create a negative feedback loop between financial markets and the real economy, which policymakers would find very difficult to break.
It seems clear that the Fed will not raise rates this year, neither next month when they meet again nor in December, which is the last meeting of the year. Will they raise rates in 2016? From this armchair, the odds are against it, as the forces of recession gather while the forces of reflation stagnate. On this front, one has to question the Fed's 2016 inflation forecast of 1.6%, up from 0.4% this year. The Fed’s crystal ball has been mighty cloudy for years, but this forecast takes the cake.
A look at the global economy helps explain why. Four factors stick out: excess debt, an absence of inflation, insufficient demand and excess supply of raw materials and manufactured goods. None of this is new – what is new is how the various hopes and remedies have fallen short while the problems deepen. The toxic combo of excess debt and disinflation is one powerful reason why the Fed did not move, and excess supply in commodities and manufactured items (look at the PPIs around the world) is another. The global economy needs demand-creation or production shut-ins, and to date both have been lacking.
There are small signs that the commodity complex is starting to finally adjust, with closures, dividend cuts and stock issuance in the mining sector and talks about talks in the world oil market. However, the manufacturing segment of the world economy is quite far behind the commodity segment, suggesting that China's need to shift excess production will ensure manufactured-goods disinflation for the foreseeable future.
One can wish for inflation and for the Fed to be able to hike, but one also needs to be focused on the realities of the current global economy. Where is the demand going to come from? Who is going to shut in production? Let?s look at the three main economic regions: Asia, Europe and the Americas. Asia is likely to be a source of manufactured-goods disinflation as it seeks to rebalance itself to a China that is a competitor first, a customer second. Japan's recovery is sputtering; it will continue QE while a fiscal stimulus package seems quite likely in the months ahead. Europe remains quite weak, and with the refugee issue now occupying policymakers, ECB-led QE seems the only game in town.
The Americas is a concern. South America is in a deep funk, whether it is Mexico's subpar growth rate, Brazil's political and economic travails, Andean copper dependency or the impact of weak oil on countries such as Colombia or Venezuela. All this is pretty well known.
The US is most worrisome because of its combination of still-high equity prices and a very bare policy toolbox to confront any economic weakness. How bare? Well, monetary policy is on hold, and the bar to QE4 is likely a much lower S&P. What about US fiscal policy, one might ask? Great question. Here is the only thing one needs to know about the US presidential election process: it takes fiscal policy flexibility away and locks it in the freezer until late 2017, two whole years from now. In other words, at a time when the US economic expansion is close to seven years old, with the Fed on hold, incomes flat, debt levels high, a strong dollar and absolutely no inflation, fiscal policy is locked away for the next two years at least!
By the way, the UK confronts similar issues and could possibly be a canary in the coalmine for US monetary policy – QE for the people on BOTH sides of the Atlantic perhaps? The UK's negative rate discussion is likely to move across the pond over the next quarter or so. One other way of thinking about it is this: which comes first, the end of ECB QE or QE4 in America? I would go with the latter.
How does one vanquish the Big Fear? With aggressive policy action on the demand-and-supply side. What is the likelihood of that? Exactly. Seen in this light, it makes perfect sense for investors to worry that policymakers no longer have their back, and thus they take some money off the table. One analogy is that the US economy is like a ship that has engine trouble, is drifting towards the rocks and is left to hope that the wind shifts and takes it away from the reef…. not exactly a bull-market, high-valuation tableau. Hope is not a strategy.
Yellen is starting to look like Gartman . . . she's screwed no matter what she does.
"Winter is coming. Maybe!"
Hard to shoot yourself in the foot when you don't have a leg to stand on.
Yellen and the Fed were probably surprised that US equity markets sold down after they announced last week they wouldn't raise rates. Previoiusly, that was almost always good for a robust rally and plenty of happy talk. Yesterday and today the market ralliied nicely, wilting now toward the end of the day, with Yellen yesterday selling an interest rate increase in the near future.