There was a time when bears looked on with dread as a Fed Permadove and vice chair Janet Yellen cleared her throat in advance of delivering prepared remarks, knowing well the algos would go full liftathon retard as soon as the flashing red highlights hit the screen. Well, Yellen did just that in a speech titled "Revolution and Evolution in Central Bank Communications" (link here [3]). Some of the highlights:
- YELLEN SAYS FED SHOULD LINK LOW-RATE OUTLOOK TO ECONOMIC GOALS
- YELLEN FAVORS ELIMINATING CALENDAR-DATE COMMITMENT TO EASING
- YELLEN WOULD LINK STIMULUS EXIT TO INFLATION, JOBS THRESHOLDS
- YELLEN SAYS 2% INFLATION SHOULDN'T BE CONSIDERED A CEILING
- YELLEN SAYS OPTIMAL POLICY FOR BALANCED APPROACH INVOLVES KEEPING ZIRP UNTIL EARLY 2016
And... nothing. In fact, worse than nothing - selloff! We have now gotten to a point where the Fed implicitly promising it may keep ZIRP until even longer than previously promised, or 2016, results in a coordinated dump.
[4]
The empty chatterbox pundits out there may say to "not fight the Fed", and the irony is that they may be right: after all why should anyone fight the Fed, when the Fed is doing a great enough job of fighting itself, for one simple reason: when you promise eternity, you can't top it (as we warned the day QEternity was announced [5]).