Friday, August 26, 2016


My blogging prospects.  I've decided that nothing much else counts any more.

Janet did her thing pretty much just as expected.  After announcing that conditions seem to be more appropriate for a rate rise sooner rather than later she covered up by adding that the Fed's decision were still data dependent which was taken to mean that there probably will not be a rise in September.    Janet likes the Labor market and the economy...why is a bit of a mystery as estimates for this quarter came in for an annual growth rate of 1% which is not exactly robust.  But Janet had a job to do on behalf of her political masters in making things look as good as possible and trying to insure that rates stay just as they are until after the election and she did it pretty well.  Not only that, nut she indicated that the Fed could probably do a couple of trillion more in QUE in Case things got a bit dodgy.  Right after the speech, the DOW traded up into double digits.  All was right with the world, the packing for the weekend in Sagaponic was underway and then Stanley Fisher showed up.

Stanley doesn't get the political thing. So when asked what he thought about Janet's talk he opined that he certainly would support a rise sooner rather than latter.  The DOW immediately traded down 100 points.  Fear not children, there will not be a raise in September but when this little dance points out is how completely artificial are the valuations of various markets as a result of Fed monetary nonsense...especially the stock market which is about as fully priced as any market has ever could not be faulted for exhibiting some concern.

In any discussion of economics it is the stock market that the great unwashed seems to understand.  Market goes up, things are good; market goes down...bad for incumbents.  The effect of the Fed on the market--much less on things like pensions, banks, credit allocation?  Forget it.  No interest.  So the market will stay up as long as the pesky Fisher guy can be held in place.  Problem is everybody knows he's the smartest guy in the room so it gets sticky at times but Janet will prevail with help from Big Danny and Lael.  Anyway, the DOW closed down 56 which was everyone getting square BUT the 10 year got out of it's own way and closed at 1.62%.  Odds it's back into the 1.50-1.59% range next week --assuming no big shock which will be something completely unforeseen as with Labor Day approaching everything will shut down on Wednesday.

So next week I plan to turn to Europe where things are becoming interesting in the aftermath of the BREXIT non Yellen, Fisher, event which as I predicted might...and I emphasize MIGHT--be having a greater effect more on the Union than on the Brits.  Interesting stuff.

Back on Monday.

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