"This Wasn't A Big Drop": Dudley Reveals That The "Powell Put" Is Far Lower

For those hoping that the "Powell Put" is struck at least as high as Yellen's, The New York Fed's Bill Dudley may have just dashed those hopes a little...

As a reminder,on her way out, former Federal Reserve Chair Janet Yellen told CBS that the market's valuations were high but said she wasn't sure if markets were currently in a bubble.

"Well, I don't want to say too high. But I do want to say high. Price/earnings ratios are near the high end of their historical ranges," Yellen said.

"Now, is that a bubble or is too high? And there it's very hard to tell. But it is a source of some concern that asset valuations are so high."

Earlier today, Dallas Federal Reserve Bank President Robert Kaplan joined a chorus of central bank officials who have called the stock market overvalued at recent levels.

Kaplan said the recent selloff is "basically a market event and these things can be healthy."

St. Louis Fed President James Bullard said that the recent market selloff was predictable because of the elevated valuation of tech stocks.

"This is the most predicted selloff of all time because the markets have been up so much and they have had so many days in a row without meaningful down days,'' Bullard said, according to the Financial Review.

"So it is probably not surprising that something that has gone up 40% like the S&P tech sector would at some point have a selloff. Before there was a selloff, people said repeatedly some day this will sell off."

The fact that there was a selloff wasn't concerning to Bullard, but he admitted that the speed of the decline was probably aided by the role algorithmic tradings plays in the market.

"What is more interesting is it has been very fast, it's been possibly aided and abetted by technical trading -- algorithmic trading. I'd be interested to see an analysis and see what role that played," Bullard said.

And then, the New York Fed's Bill Dudley says an equity rout like the one that occurred in recent days "has virtually no consequence for the economic outlook."

Adding that, if it continued to go down sharply, “that would affect my view,” he says at event in New York, but "this wasn't that big of a bump in the stock market" and " is not a big story for central bankers yet."

“It’s still up sharply from where it was a year ago”

In other words, it's going to take more than a 13% plunge in 5 days to stir Jay Powell's Plunge Protection Team into action...


Ink Pusher whatswhat1@yahoo.com Wed, 02/07/2018 - 12:20 Permalink

"Business as usual" is NOT business as usual anymore...

Technological advancements will soon make virtually every job obsolete,impossible to achieve affordable privacy and destroy the concept of private ownership.

The Blind Opportunism of the rhetorical BTFD mindset is parasitical in nature and offers zero improvement to an already deeply flawed and morality free trading scenario.

In reply to by whatswhat1@yahoo.com

buzzsaw99 Wed, 02/07/2018 - 09:42 Permalink

the only question is when does the fed step in.  i know the level that i would step in at but the fed's number is probably higher than that so i will stay put.  oh well.

khnum Wed, 02/07/2018 - 09:43 Permalink

Futures were flat now its to the moon does it fucking matter what anyone thinks its not a market its a central bank share registry,a joke.You are supposed to be able to make money on the way up and down.

khakuda Wed, 02/07/2018 - 09:52 Permalink

PE ratios are not the only relevant measure of valuation.  All other measures are off the charts.  PEs look less expensive because interest costs have declined due to unsustainably low rates and corporate taxes that have declined due to deficit increasing tax cuts.  Neither low rates nor low taxes are sustainable long term when after tax interest rates are below inflation and deficits are large and growing.

...but we can all pretend for a while.  Thanks Janet.

PitBullsRule Wed, 02/07/2018 - 09:57 Permalink

Here's my professional investment advisor, stock picker, price checker, I couldn't get a real job, opinion:

"Its up there, could keep going, bouncing around, could settle down, maybe zoom up, maybe zip down, maybe oughta follow my lines that I made with a ruler following the peaks and valleys and squiggles, I could give you a price but never a date, I could give you a date but never a price, but really... I'm just full of shit like all the other numb nuts!"

mily Wed, 02/07/2018 - 10:29 Permalink

I don't think other fed folks like Jerome much and it looks like Trump made wrong decision choosing a non-joo member from the joomanji circus and he's being proved that very thing with vengeance

alpha-protagonist Wed, 02/07/2018 - 10:46 Permalink

Yellen's dumb as a fox. All these fed chairs do, is the bidding of the administration. Her quips on the way out were a fuck you aimed at everyone who criticized her for being stupid. I really hate passive aggressive people...

inosent Wed, 02/07/2018 - 11:10 Permalink

If the weekly holds up closing down, there is a very high statistical correlation between a long tail, small downbody, with a plunge below MA's and the following week not only closing up, but also leading to more highs (like above 27000 dow, for example).

All we are seeing was, not sure how these things happen, but somebody - presumably pretty big - was not in the market, and missed the move, so they were simply 'let in'. In other words, they got a second chance to come in with good prices relative to the overall action, and now the market will just simply resume what it was doing.

I was buying y'day when the dow futures were down ~450 points, and just sat there, watching the price action impassively. It was still a little early in the asian session, so the plunge -850 didn't surprise me. I did note that the futures kept hitting -850, like it was 0 or something. No trading below it. That was weird, almost unnatural.

Besides, there was a gigantic hole in the chart, and the market just closed it. Good luck with that short now.

Rex Andrus Wed, 02/07/2018 - 11:19 Permalink