While we have been told again and again that there are no asset bubbles - although th emost recent FOMC statement referenced concerns over small-cap mulitples and covenant-lite loan issuance - it seems the Fed's Jeff Lacker just let slip some ugly truthfulness...Answering questions after a speech proclaiming growth ahead and rising inflation, he said:
- *LACKER RELUCTANT FOR FED TO 'PRICK' ASSET-PRICE BUBBLES
Well there it is. There are asset bubbles? But Lacker - who has been anti-QE to some extent - knows that if the Fed moves to actually do anything about it (other than jawbone), it's all over. Perhaps as more realize the transition from a Bernanke Put to a Yellen Collar has occurred, there will be no need to jawbone any longer.
But jawbone on they will as open-mouth operations try to persuade investors that strong forward guidance is just as effective as printing 100s of billions of USDs....
- LACKER SAYS MARKET EXPECTATIONS THAT INTEREST RATES WILL REMAIN LOW MAY BE BIGGER DRIVER OF MARKET LIQUIDITY, EQUITY PRICES THAN BOND BUYS