It appears the Federal Reserve is in full court press mode to jawbone the rational exuberance out of the stock markets... On the heels of Yellen's largely ignored "stretched valuations" comments, Dallas Fed's Fisher exclaims:
- DALLAS FED PRESIDENT FISHER SAYS 'MARKETS ARE OVERSHOOTING'
- FISHER CONCERNED FED MAY 'BE STAYING TOO LOOSE TOO LONG'
- FISHER: I DON'T THINK YOU SHOULD 'POP' A BUBBLE, BUT SHOULD LET SOME SPECULATIVE STEAM OUT OF MARKETS
His plan for this "letting out of steam" is to start shrinking the Fed balance sheet in October and raising rates early in 2015. Of course, what does the Fed know about bubbles? We are sure the spin will come soon that this is bullish as 'froth' will be removed and then the secular bull can go on (aside from the total and utter lack of liquidity in markets, small doors and large crowds do not make for good endings).
Finally, when Fisher says don't pop the bubble, that suggests there is no bubble, yes?