Investors are not betting Janet Yellen will follow a fellow central banker’s lead and declare interest rate rises “could happen sooner than markets currently expect”.
Suck hawkish cries can be left to Mark Carney. The Federal Reserve chairman, by contrast, will likely use her post-policy meeting press conference this week to reiterate US rate rises are still a way off. But are they?
What if we were to look not at what Ms Yellen says, but at what Ms Yellen has done? We might then conclude that the Fed’s first rate hikes could indeed happen sooner than expected.
This is the intriguing premise of a tool being used internally at BlackRock, the world’s largest fund manager, which it has nicknamed “the Yellen index”. It is a measure that suggests, on the economic indicators favoured by Ms Yellen, monetary tightening is already overdue and the Fed falls further behind the curve with every passing day.>> Read More
Traders may have made up to $256 million in illicit profit by getting early word of the Federal Reserve’s decisions to loosen or tighten the money supply, according to researchers at Singapore Management University.
The researchers cited “robust evidence” of abnormally large price movements and imbalances in buy and sell orders from September 1997 through June 2013, when Ben Bernanke was chairman of the Fed.
The price movements were “statistically significant and in the direction of the subsequent policy surprise,” researchers Gennaro Bernile, Jianfeng Hu and Yuehua Tang said in a paper.
Business Week first reported the findings Tuesday.
The researchers said the moves occurred before and during the time that reporters at the Treasury Department were given advance notice of the Federal Open Market Committee statements in periods known as lockups.
The committee’s closely watched policy decisions include setting short-term interest rates and a range of other actions to stimulate or rein in the economy.>> Read More
He may no longer be the US Federal Reserve chairman, but when Ben Bernanke speaks, the world still listens, carefully. On Tuesday evening, an auditorium packed with India’s famous names listened with rapt attention when Bernanke took centre stage at Mumbai’s Jamshed Bhaba Theatre and spoke on a broad range of issues, including the takeaways from the tumultuous economic events on his watch from 2006 till early this year.
Independence of the central bank is something clearly close to his heart. Asked for his advice to the next government about its relations with the Reserve Bank of India, Bernanke said he didn’t know much about India’s political dynamics, but what was critical for any country was that its central bank’s independence be guarded. He was speaking at the second Kotak Presidium, a forum for global leaders to share ideas that shape the future.
“You have an excellent central bank governor in Raghuram Rajan, who has been my long-time colleague as an academician in the US. As the Indian economy matures, an independent and responsible central bank is really central to its success,” he said. Bernanke, who has worked with both the Republican and Democratic governments as Fed chairman, said he was lucky as both President George W Bush and Barack Obama were strong defenders of the central bank’s autonomy.>> Read More
Former Federal Reserve Chairman Bernanke was in the audience of a conference at Brookings Institution. The Governor of India’s central bank Rajan critiqued the Federal Reserve’s unconventional policies and the spillover effects. He essentially laid India’s financial problems at the feet of the Federal Reserve, quantitative easing, tapering and forward guidance.
Ironically, in order to help minimize the repeat of past Fed tightening cycles, the Federal Reserve gave the world a long advanced warning of the pending shift in policy. Moreover, rather than deliver it in September 2013, which many (though not us) expected, the Fed waited an extra three months. Bernanke responded to the criticism, in a way that perhaps only he can.
With Bernanke gone, the remaining Fed members knowing full well they will be crucified, metaphorically of course (if not literally) when it all inevitably comes crashing down, are finally at liberty with their words… and the truth is bleeding out courtesy of the president of the Dallas Fed, via Bloomberg.
FISHER SAYS QE WAS A MASSIVE GIFT INTENDED TO BOOST WEALTH
Which incidentally coincides with Bernanke’s heartfelt “admission” that “my natural inclinations, even if it weren’t for the legal mandate, would be to try to help the average person.“As long as helped to boost the wealth of the non-average billionaire., all is forgiven. “The result was there are still many people after the crisis who still feel that it was unfair that some companies got helped and small banks and small business and average families didn’t get direct help,” Bernanke said. “It’s a hard perception to break.” The truth, as again revealed by Fisher, will not help with breaking that perception.
We wonder how President Obama, that crusader for fairness, equality and all time Russell 200,000 highs, will feel about that? In the meantime, just like the Herp, QE is the gift that keeps on giving.. and giving… and giving… to the 0.001%.
As expected Janet Yellen’s first FOMC statement showed another $10bn taper (more tightening according to Jim Bullard) but the wordy shift from quantitative thresholds to “we’ll know it when we see it” qualitative guidance is relatively dovish (despite improved economic outlooks):
*FOMC SEES `SUFFICIENT UNDERLYING STRENGTH’ IN ECONOMY
*FOMC SAYS IT WILL LIKELY REDUCE QE IN `FURTHER MEASURED STEPS’
*FED: LOW TARGET RATE APPROPRIATE FOR CONSIDERABLE TIME POST-QE
*MORE FED OFFICIALS SEE AT LEAST 1% FED FUNDS RATE END OF 2015
*FED DROPS 6.5% JOBLESS THRESHOLD FOR RAISING FED FUNDS RATE
While Bernanke’s last meeting appeared full of disagreement; this time less so.
Perhaps it was his comments today that “a construction boom is coming… tune out the noise and enjoy the bull market” due to lower oil costs and improving weather; but it appears JPMorgan and the permabull are about to part company after 15 years:
*JPMORGAN U.S. CHIEF EQUITY STRATEGIST THOMAS LEE DEPARTS FIRM
*JPMORGAN ANNOUNCES LEE’S DEPARTURE IN INTERNAL MEMO
It is unclear if Lee’s next career will be as waterboy for Ben Bernanke on his $250,000/speech global speech tour. What is, however, likely is that in his place JPM will simply unleash an algorithm that keeps raising JPM’s “official” S&P500 price target to 100 points above wherever the S&P may be at any given moment.
The Chairman of the Fed is known for her wit and wisdom. One thought it useful to memorialize some of her wit on a continuing basis. We hereby inaugurate a compilation of her “Sublime Jokes” so as to gain gravitas from her the same way her colleagues and supporters in the press who always admire her sense of humor.
Please feel free to augment this list with other examples of her hilarious remarks.Janet Yellen’s humor:
But even as she pushed for more aggressive policies to deal with the financial crisis [of 2008] and the economic downturn, Ms. Yellen also displayed an ability to disarm her critics with a sort of gallows humor, even in the darkest days. “In the run-up to Halloween, we have had a witch’s brew of news,” she said to the laughter of her colleagues, before quickly apologizing for her sarcasm.
As a forecaster, Ms. Yellen was at something of an advantage. She was based in California, where some of the earliest signs of distress appeared. In a lighter moment, she joked that the problems were not just in the collapsing housing market.
“East Bay plastic surgeons and dentists note that patients are deferring elective procedures,” she said to laughter, according to a transcript of the meeting on Sept. 16, 2008.>> Read More
The Federal Reserve said it would further pare its signature bond-buying program next month, a move that solidifies the central bank’s strategy for winding down the program in small steps at each of its meetings as long as the economy continues to improve.
The Fed’s policy-making committee said in a statement Wednesday that it would trim its bond purchases to $65 billion per month in February, from a monthly pace of $75 billion in January.
The decision to pull back on the bond program was unanimous, marking the first time there wasn’t a dissent at a policy meeting since June 2011.>> Read More