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Janet Yellen's "Junk Bonds Are Contained" Moment

Tyler Durden's picture




 

From Janet Yellen's February 27, 2014 Testimony before the US Senate Committee:

  • Low interest rates can give rise to behavior that poses threats to financial stability and therefore we need to be looking at that very carefully and we are doing so in a very thorough way, I believe. We're looking at credit growth to see whether or not that has potential worrisome trends.
  • We're looking particularly to our stress tests at financial institutions. In a low-interest rate environment we have to worry about whether or not they're appropriately dealing with interest rate risk.
  • We are watching very carefully for the development of any such excesses. We are very focused on not allowing such a thing to happen again.
  • While there might be a few areas where I have concerns, such as deteriorating underwriting standards in leveraged lending, farmland prices, a few things, I don't see those excesses having developed at this point.

And then, from Janet Yellen's news conference after the March 18, 2015 FOMC meeting:

  • In some corporate debt markets, we do see evidence of unusually low spreads.
  • More broadly, we do try to assess potential threats to financial stability. And in addition to looking at asset valuations, we also look at measures of credit growth, of the extent of leverage being used in the economy and in the financial sector, and the extent of maturity transformation.
  • And taking into account a broad range of metrics that bear on financial stability, our overall assessment at this point is that threats are moderate.

How about now?

 

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Mon, 12/14/2015 - 13:41 | 6922093 BullyBearish
BullyBearish's picture

We didn't see it coming...

Mon, 12/14/2015 - 13:46 | 6922116 UndergroundPost
UndergroundPost's picture

-----> want Yellen to hike up her rate skirt

-----> want Yellen to keep her skirt where it is & continue to tease

Mon, 12/14/2015 - 14:12 | 6922253 Cognitive Dissonance
Cognitive Dissonance's picture

The Fed can never admit they are able to predict recessions, for to do so would then set the standard to do so in the future. Since their policies directly contribute to (if not cause) each recession, to predict a recession would simply point a finger towards their own destructive policies.

This is the Big Lie that must be maintained, that the Fed is a guardian of the economy and not the cause and effect of the inevitable, and increasingly destructive, recessions/depressions.

Mon, 12/14/2015 - 14:15 | 6922270 kralizec
kralizec's picture

<---She didn't contain that!

'<---She can't contain that!

What difference does it make?!

Mon, 12/14/2015 - 14:18 | 6922280 JRobby
JRobby's picture

Guessing out loud that the Fed is a big enough container

It isn't

Mon, 12/14/2015 - 15:58 | 6922778 vollderlerby
vollderlerby's picture

I'm begging you, please change that picture of Yellen that sits next to every article about her.  

Mon, 12/14/2015 - 13:54 | 6922145 yogibear
yogibear's picture

Jack Lew's tanks in the streets moment coming. 

Bail out time again.....

Mon, 12/14/2015 - 14:58 | 6922516 DavidC
DavidC's picture

Jack Lew - the invisible man.

DavidC

Mon, 12/14/2015 - 13:42 | 6922096 Mark Mywords
Mark Mywords's picture

Well, to be fair, nobody could have seen this coming.

Not a one.

Mon, 12/14/2015 - 13:42 | 6922097 MountainsRoam
MountainsRoam's picture

Eerything is perfect, no worries.. Time to panic..

Mon, 12/14/2015 - 13:45 | 6922098 Laughinggrizzley
Laughinggrizzley's picture

Yea, and what did Bernake say about housing in 07'! HAHAHAHAHAHA

Mon, 12/14/2015 - 13:43 | 6922100 wmbz
wmbz's picture

Well if Jack Yellen sez it...it must be true! We will need MOAR data though!

Mon, 12/14/2015 - 13:43 | 6922101 LawsofPhysics
LawsofPhysics's picture

"noone could have seen this coming"...

Remember that line when you see the fucking guillotine.

Mon, 12/14/2015 - 16:33 | 6922928 Implied Violins
Implied Violins's picture

Make sure her head is turned up and her eyes are propped open as the blade is released.

Mon, 12/14/2015 - 13:43 | 6922102 Calculus99
Calculus99's picture

It's pure human fraility that we all listen to this kind of shit.

You get more sense out of a Disney cartoon.  

Mon, 12/14/2015 - 13:43 | 6922106 KnuckleDragger-X
KnuckleDragger-X's picture

Standing athwart history screaming 'BULLSHIT!. It's all crumbling, but another coat of paint will fix everything....

Mon, 12/14/2015 - 13:45 | 6922109 orez65
orez65's picture

Hey, what's to worry?! A few $Trillion Treasuries? The Fed can buy those in a minute!!

Mon, 12/14/2015 - 13:49 | 6922126 Dr. Engali
Dr. Engali's picture

We wouldn't be having these problems if those pesky "markets" would stop trying to find their natural levels.

Mon, 12/14/2015 - 13:49 | 6922127 Bastiat
Bastiat's picture

Yeah, it's all good.  What's a little 25bp gonna do?  Go for it, Janet.

Mon, 12/14/2015 - 13:51 | 6922135 i_call_you_my_base
i_call_you_my_base's picture

Once you hear buffett is buying junk bonds you know the fed is ready to start buying them.

Mon, 12/14/2015 - 13:52 | 6922138 Bastiat
Bastiat's picture

Unless he's buying particular situations where he has inside information.

Mon, 12/14/2015 - 13:56 | 6922161 i_call_you_my_base
i_call_you_my_base's picture

I meant a lot, like when he went all in on MBS.

Mon, 12/14/2015 - 14:43 | 6922437 Bastiat
Bastiat's picture

I got it -- was just taking the opportunity for another dig at Uncle Warren.

Mon, 12/14/2015 - 13:52 | 6922137 Sudden Debt
Sudden Debt's picture

THIS BOAT IS UNSINCKABLE!!! Now let's have a brandy at the bar while those morons are pedling away in those almost empty lifeboats....

Mon, 12/14/2015 - 15:32 | 6922658 J Jason Djfmam
J Jason Djfmam's picture

<Bullish

<Bullshit

Mon, 12/14/2015 - 13:52 | 6922139 yogibear
yogibear's picture

Bernanke's subprime mortagages are contained statement in 2008.

LOL, Until it all blows up.

Comical.

Mon, 12/14/2015 - 13:53 | 6922140 Bill of Rights
Bill of Rights's picture

I can see Yellen kneeling besides her bed

 

Please Oh please Sky Jesus ( pick your flavor ) just give them a 900 credit score one last time so they can borrow my way out of this, I want a Legacy not a Fallacy!

Amen, oh and Sky Jesus should I go long Gold or short? thank you you're Humble servant

Yellen.

Mon, 12/14/2015 - 13:57 | 6922168 Arnold
Arnold's picture

With just minor punching up, you could have the Comment of the Year Trophy for Superior Participation.

Mon, 12/14/2015 - 14:16 | 6922272 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

Just the opposite, sadly, Yellen prays to satan, not Jesus.  She's satanic. 

Mon, 12/14/2015 - 13:54 | 6922144 ThroxxOfVron
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"our overall assessment at this point is that threats are moderate. "

 

Do ANY of these assholes understand the meaning of the word 'moderate'?

Mon, 12/14/2015 - 13:56 | 6922160 Jethro
Jethro's picture

Hoocoodanode?!?!

Mon, 12/14/2015 - 13:58 | 6922173 Doppelganger71
Doppelganger71's picture

She needs to be contained - in a fuckin' straight jacket........................................

Mon, 12/14/2015 - 13:58 | 6922176 markar
markar's picture

our overall assessment at this point is that threats are moderate.

 

Would that be a Yellow or an Orange threat level?

Mon, 12/14/2015 - 16:04 | 6922810 J Jason Djfmam
J Jason Djfmam's picture

Threat Level Brown.

The Undershorts Stain Chart says Brown.

Mon, 12/14/2015 - 13:59 | 6922184 ThisIsBob
ThisIsBob's picture

"contained"  Where have I heard that before?

Mon, 12/14/2015 - 15:33 | 6922661 J Jason Djfmam
J Jason Djfmam's picture

A "Depends" commercial.

Mon, 12/14/2015 - 14:03 | 6922186 nakki
nakki's picture

What else would you expect that Muppet to say. The next "implosion" will be met with even moar QE moar consolidation and moar greed, all to "save" main street. Its all bullshit and everyone knows it. All that they've done with every crisis is to print moar debt. At some point we'll have 3 banks 3 insurers 4 major media outlets and a government going into debt at a clip of 2 trillion a year. If anyone thinks part time no benefit jobs are going to carry 80 million boomers they're completely devoid of any common sense. 

The idea that the "stock market" can be used as a policy tool to make things appear well is crazy. The real economy blew up years ago. What happens when all the good not great but good paying jobs disappear? What happens when the boomers can't unload their houses to Gen-x? 

Sooner or latter there's going to be a reset, I just hope its not through a massive world war. 

Mon, 12/14/2015 - 14:23 | 6922329 ThroxxOfVron
ThroxxOfVron's picture

"What happens when all the good not great but good paying jobs disappear? What happens when the boomers can't unload their houses to Gen-x?  "

 

Where have you been for the last 8 years?

The Good paying jobs are gone.  The middle class has lost almost a third of it's wealth and is now dissolving/sinking into the underclass.

The only people buying homes for the last 8 years are foreign criminals and hedge funds.  Millions of people aren't paying their underwater mortgages because they can't and the banks can't forclose or they go bust.

The system is fucked.

The population is debt daturated, overtaxed, financially and legally oppressed, functionally leaderless...the jobs markets outsourced and/or over-run with illegals and 3rd world economic migrants without any allegiance to the existing culture or customs...

Mon, 12/14/2015 - 14:08 | 6922238 Big_bear
Big_bear's picture

Its "contained" until it expldoes and takes down the whole casino ... 

Mon, 12/14/2015 - 14:11 | 6922247 maneco
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I remember a past Fed Chairman who said sub-prime was contained!!! https://youtu.be/W6LbZhWeysk

Mon, 12/14/2015 - 14:14 | 6922268 GRDguy
GRDguy's picture

So, Yellen has become Mrs. Magoo.  "I can't see . . . . ."

Mon, 12/14/2015 - 14:25 | 6922338 ThroxxOfVron
ThroxxOfVron's picture

Greenspan left his special Magoo frosted glasses in the desk drawer...

You take the job, you wear the glasses: you see NOTHING.

Mon, 12/14/2015 - 16:38 | 6922950 Implied Violins
Implied Violins's picture

Actually, they make everything, and I mean EVERYTHING, seem to go up and to the right.

Mon, 12/14/2015 - 15:33 | 6922664 J Jason Djfmam
J Jason Djfmam's picture

Yet Magoo continued to drive.

Mon, 12/14/2015 - 14:16 | 6922273 gregga777
gregga777's picture

Janet Yellen quotes:

"We're looking at credit growth…";
"We're looking particularly to our stress tests…";
"We are watching very carefully for…";
"While there might be a few areas where I have concerns…";
"…we do see evidence of unusually low spreads…";
"…we do try to assess potential threats to financial stability…";
"…our overall assessment at this point is that threats are moderate."

We are paid to look but nobody says that we have to actually see anything. In fact, our compensation packages are predicated on not seeing anything to worry about.

Mon, 12/14/2015 - 15:37 | 6922680 J Jason Djfmam
J Jason Djfmam's picture

Who writes this shit anyway?

Mon, 12/14/2015 - 14:16 | 6922274 yogibear
yogibear's picture

Curtains in the theater are burning in the background...

"Remain calm, everything is under control. No need to use the exits yet".

 

Mon, 12/14/2015 - 14:29 | 6922362 DarthVaderMentor
DarthVaderMentor's picture

Ole Yeller will contain the problem for sure by raising the rates.....that ought to fix it for good!

Mon, 12/14/2015 - 14:33 | 6922383 Satan
Satan's picture

"And finally Madam...a wafer thin mint?"

Mon, 12/14/2015 - 15:35 | 6922671 VWAndy
VWAndy's picture

When the Fed chair says its contained. She means its contained to the 99.9%.

Mon, 12/14/2015 - 16:03 | 6922803 1stepcloser
1stepcloser's picture

Whats wrong with Penis Bonds said the Chairwoman..

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