On September 8-9, Janet Yellen sent out a couple of fedeads to talk tough about raising rates. On Friday,September 9, the Dow dropped over 400 points. On Monday, September 12, Janet Yellen sent out two more fedheads to completely roll back what was said on September 8-9. That was the end of any potential rate hike. Simply put, Mrs. Bubble floated a trial balloon to see how markets would react to any rate hike and the balloon popped quickly. So stop listening to the B.S. about the economy, about jobs, about dots, about inflation and about another upcoming terrible season for the Knicks. This is all about markets. This is 100% about the markets. They cannot have markets go down.
If they hiked rates, markets would swoon. If markets swoon, the wealth effect heads south. If the wealth effect heads south, the steroid economy heads south. If the steroid economy heads south…you get the hint. For now, the bubble continues.
This is now getting very, very old. It is affecting too many people, mainly the unwary savers who only want a riskless income investment which has been taken away from them by a bunch of ex- tenured professor’s who shouldn’t be running a lemonade stand. We were utterly amazed by one comment from Mrs. Bubble and that was about being modestly accomodative. Modestly accomodative? 8 years of 0% rates…depending on what abacus you are using, $15-20 trillion of printed money…trillions in negative rates and the outright buying up of markets but “modestly accomodative!” We are speechless and it is very tough to get us speechless.