pebblewriter

Tag: Yellen

  • Yellen Goofs, Tells the Truth

    Two quotes by Janet Yellen, only hours apart.  The first clearly emphasizes the very real risk of rapidly rising inflation…

    “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy.”

    …while the other clearly walks back the earlier assertion.

    “I don’t think there’s going to be an inflationary problem. But if there is, the Fed will be counted on to address them.”

    The reason for the second comment, of course, was the market’s reaction to the first – a tantrum, if you will.

    Most of us remember when, in 2013, Bernanke spooked the markets with talk of a rollback in bond purchases. Yellen did the same thing a few years later as Fed chair. This one is slightly different, as it highlights the facts which, by now, should be clear to everyone: inflation is a very real danger to the economy and the markets.

    Yellen’s retraction won’t change that.

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  • Whistling Past the Graveyard

    Only a couple of years ago, central bankers became adept at repairing the damage done to stocks after big shocks.  That changed with Brexit, when the strategy shifted to pushing stocks as high as possible before the damage was done… and, still doing all the requisite ramping after the fact.

    They perfected the technique after the US election, turning a 5% overnight dump in the futures to a breakout above important resistance — where stocks remain, today.

    It made a bold statement — that the market was resilient enough to weather a sea change in the political landscape.  This week should be all about proving how resilient it is in a rising interest rate environment.  Judging from the mild drop over the past week, investors are quite unconcerned.

    Does this make sense, or are investors whistling past the graveyard?

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