Oh man, it just piles up higher and higher.
Yellen is Going to Talk the Markets Up to New Highs
If you can get past the photo that leads this story with your breakfast intact, you will be treated to…
“Asset purchases are not on a preset course,” Yellen told Congress , “and the committee’s decisions about their pace will remain contingent on its outlook for the labor market and inflation.”
Actually the Treasury bond market’s decisions about their pace will remain contingent on yields.
That’s all stock investors needed to hear. Asset purchases, also known as quantitative easing or QE, will keep flooding the market with money.
Stock investors? More like stock speculators chasing risk as long as the bond market lets Yellen promote more risk to chase.
There are few other places to turn for a return when interest rates are zero.
The whole point of this racket, isn’t it? Everybody into the pool!
She thinks talk is a tool.
I think she is a tool.
“Communication has long been a topic of great interest to me, and one I have worked on more directly since 2010, when Chairman Bernanke asked me to lead a new [Federal Open Market Committee] subcommittee on communications,” Yellen told the group of financial journalists.
Yes, can’t we all just communicate?? Can’t we all just get along? I am sure the speculation-stoked market will not over react to every damned utterance, whether up or down.
But after the Internet bust in the early 2000s, the Fed started announcing its plans for interest rates long into the future.
“It told the public that it intended to keep the federal funds rate low for longer than might have been expected by adding to its statement that ‘in these circumstances, the committee believes that policy accommodation can be maintained for a considerable period,’” Yellen noted.
Bring on the age of hyper speculation, AKA rolling booms and busts.
“For the first time, the committee was using communication — mere words — as its primary monetary policy tool. … The FOMC had journeyed from ‘never explain’ to a point where sometimes the explanation is the policy.”
Now every jockey with an eTrade account can be right there with the big boys, helping game the market with every mere word from these self-important clowns.
Whoever said talk is cheap probably never traded stocks. As our new Fed chair, Yellen is just getting the conversation started, and it’s an easy bet she can talk the market to new highs before year-end.
I thought the writer may have had his tongue in cheek until I read this nugget.
“Better times and a transition away from unconventional policies may make monetary policy less reliant on communication,” she said in April. “But I hope and trust that the days of ‘never explain, never excuse’ are gone for good.”
Oh Janet, I suspect you’ll have a lot of explaining to do one day.
