All Janet Yellen, All The Time Sends Stocks Soaring

“Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance.”

-- Janet Yellen, in prepared remarks to House Financial Services Committee, Wednesday, July 12, 2017

Since that statement, released prior to the opening bell on Wednesday, stocks have taken flight to new highs. For instance, the Dow Jones Industrial Average closed Tuesday at 21,409.07, and closed Friday at 21,637.74. A couple hundred points isn't bad, but check out the NASDAQ:
NASDAQ close 7/11/17: 6,193.30
NASDAQ close 7/14/17: 6,312.47

119 points in three days is OK work if you can get it, and Wall Street perfectly got it, interpreting Yellen's statement that the Fed's controlled federal funds interest rate would not be rising very quickly this year, if at all. Good news! Buy!

The soft underbelly of that statement is that the US - and by extension, the global - economy is not growing, inflation is not roaring (June CPI was flat, as in 0.0%, and the Fed is desperate for inflation), wages are not rising and employment is still flagging. Additionally, the number of people out of the labor force is enormous, pension plans in states such as Illinois, Connecticut, California and elsewhere are imploding, putting additional pressure on the Fed, Wall Street and the PPT to keep asset prices rising. Otherwise, the entire financial system collapses.

Also, P/E ratios on the S&P 500 are hovering around 25%, which is about 40% higher than the norm. The market badly needs to correct, but, thanks to Yellen and her cohorts, central banks continue to purchase assets at exorbitant prices.

What could go wrong?

Have a great weekend.

At the Close, 7/14/17:
Dow: 21,637.74, +84.65 (0.39%)
NASDAQ: 6,312.47, +38.03 (0.61%)
S&P 500: 2,459.27, +11.44 (0.47%)
NYSE Composite: 11,897.31, +52.69 (0.44%)

For the week:
Dow: +223.40 (1.04%)
NASDAQ: +159.39 (1.59%)
S&P 500: +34.09 (1.41%)
NYSE Composite: +144.33 (1.23%)

Wall Street To Yellen: We Love You, Janet

Wall Street's reaction to Fed Chairwoman Janet Yellen's appearance on Capitol Hill the past two days has been nothing short of a high school romance.

It's been impulsive, short and intense.

And now, with hope, it's over. Perhaps we'll all be spared the details of the jilting. Janet will probably say something about stocks being overvalued and the traders will quietly sulk away, probably over to the bond pits, where they know true love - albeit at low yields - can be found.

The idea that frumpy Janet Yellen can make the masters of industry and, say some, the universe, trip and fall over each other on their ways to buying stocks is as ludicrous as the entire idiocy of centralized financial planning by the Federal Reserve.

Since global finance and economics is vast and unpredictable, the power of the Fed to control it is diminished. Certainly, the Federal Reserve has tools at its disposal to direct policy actions which often translate into tangible results in the real world, but, more often than not, they cannot direct the actions of billions of individuals, millions of businesses, and trillions in currencies.

Those engaged in the business known as the financial industry would like to believe - and to pass that belief along to clients - that the Fed does have everything under control. The facts speak differently. In the fall of 2008, when Lehman Brothers collapsed, the Fed had lost control and they scrambled, along with their central banking brethren from other countries, to restore some sense of balance and sanity.

But, they were too late. Stocks crashed. Banks needed massive injections of liquidity (money) from taxpayers in the form of a $700 billion monstrosity known in the day as TARP. Strange as it may seem, TARP actually stood for Troubled Asset Relief Program. The troubled assets were mortgages. The relief was in the form of taxpayer money. Essentially, the crooked banking cabal tacked another $700 billion onto the trillions of debt already owed by the federal government, i.e., the citizens and businesses of the United States of America.

So, there's no wonder that Wall Street loves the Fed and the fair-haired Janet Yellen. They're assured that whatever numbskull trades or risky maneuvers the banks and financial institutions make will be promptly papered over by Janet and her gang of official-looking thieves.

The Federal Reserve has robbed Americans and the rest of the world since 1913. It has endured two World Wars, a massive global depression, countless smaller recessions, booms, busts, inflations, deflations, devaluations, the start and end of Bretton Woods, confiscation of gold, manipulation of silver and mostly, inflation that has devalued the US Dollar, the currency of the United States of America, by 97% over the past 104 years.

When the next financial crisis arrives - and it will, eventually - the Fed will be standing firm, looking cute and sweet, with a plan to revive the spirit and stability of the "system." When that time comes, Wall Street must be restrained by the public. They must be told, like the high school boys they imitate, "she's no good for you."

Investors and fund managers and pensioners must be told, "you're in an abusive relationship. You need to get out."

It's time to end the love affair with the Fed.

At the Close, 7/13/17:
Dow: 21,553.09, +20.95 (0.10%)
NASDAQ: 6,274.44, +13.27 (0.21%)
S&P 500: 2,447.83, +4.58 (0.19%)
NYSE Composite: 11,844.62, +18.73 (0.16%)

What Janet Yellen Said To Congress...

Janet Yellen, Fed Chairwoman, blathered on about the economy, monetary and fiscal policy on Wednesday before the House Financial Services Committee, at one point saying that chances for the economy to improve or decline were roughly equal.

Those words set off the market like a bottle rocket, essentially painting the Fed as "dovish," meaning that both interest rate hikes and the winding down of its enormous balance sheet were subject to adjustments.

In other words, easy money as far as the eyes can see, and Wall Street took up the baton and ran with it, sending the Dow to new all-time highs and the NASDAQ up sharply.

Janet Yellen obviously doesn't know squat about the economy. Anybody capable of fogging a mirror could have made a statement such as hers, as in, "oh, sure, the economy might improve, or maybe not."

It's amazing that people put so much faith (and money matters) into the hands of fools such as Yellen and her fellow central bankers, all of whom have as their primary interest, themselves, not you, not the consumer, not the economy of any nation.

On Thursday, Yellen testifies before the Senate Banking Committee.

Cheers!

At the Close, 7/12/17:
Dow: 21,532.14, +123.07 (0.57%)
NASDAQ: 6,261.17, +67.87 (1.10%)
S&P 500: 2,443.25, +17.72 (0.73%)
NYSE Composite: 11,825.90, +81.13 (0.69%)

Bull or Bear? By October, It Probably Won't Matter

Another day, another boring stock market supposedly awaiting Janet Yellen's annual testimony before the the House Financial Services Committee on Wednesday and the Senate Finance Committee, Thursday.

Big YAWN.

Janet Yellen's words are worthless. She mouths big words like macro-prudential, as though she actually practices it while heads spin and eyes glaze over trying to comprehend its meaning.

In reality, the term refers to policy actions designed to mitigate systemic risk. It's rubbish. It's Fed-speak. While it sounds good on the surface, everything is at risk, including the entire global financial system that nearly imploded in 2008. If enough companies, or, heaven forbid, banks, default on their obligations, the risk is interconnected, and probably more so than in 2008-09.

There are no safeguards. There are only bigger bets, known as derivatives, credit default swaps (CDS), leverage, and arbitrage.

The system is as fragile now as it was just prior to the Great Financial Crisis (GFC) of 2008-09, and probably, it is even more fragile, simply because the Fed does not have the tools to fight back against deflation and recession, the dual threats to capitalism.

So, Janet Yellen will testify to congress on Wednesday and nothing at all will change. Meanwhile, markets are stuck in neutral, which means, in these absurd times, a tilt toward slightly positive.

Another big YAWN.

The big moves will be in September, when the laid-back congress will be forced to raise the debt ceiling and come up with another annual budget. It's likely to be a wild time, even for this do-nothing congress. President Trump will be holding both Republican and Democrat feet to various fires.

If not September, then October should be another possible meltdown time frame. It always has been, and, with the markets and economy showing severe signs of fraud and stress, a market "event" is long, long overdue.

At the Close, 7/11/17:
Dow: 21,409.07, +0.55 (0.00%)
NASDAQ: 6,193.30, +16.91 (0.27%)
S&P 500: 2,425.53, -1.90 (-0.08%)
NYSE Composite: 11,746.72, -5.07 (-0.04%)

Something To Do While Awaiting Speaking By Janet Yellen

Stocks were briefly lower, then higher, but finished split, almost even, for the day.

This is part of the effect of having globalists like Janet Yellen and the Federal Reserve controlling global economics. ON Monday, all of Wall Street is apparently waiting for the Fed Chairwoman's speech before congress on Wednesday and Thursday, or the release of the Fed's Beige Book of economic conditions on Wednesday.

Or the market is waiting for something else. Earnings, CPI, Industrial Production. It's always something, and it seems that the market is always waiting.

Over the past eight years this strategy has worked out pretty well for stock investors. Waiting has resulted in massive market gains over time, even though data has been less-than-splendid and often outrightly bad. That's where the "bad news is good news" meme came about: even though economic conditions were seen as negative, it was good for stocks because interest rates would remain low (making sure that stocks were the only game in town) and the free money from the Fed fountainhead would continue to flow.

Seriously, nobody is actually waiting for anything, no matter how much the TV and newspaper financial pundits like to propound on the topic. Investment decisions aren't exactly made based on data, at least not since the GFC. Stocks, and to a large extent, central banks and the Federal Reserve, have become disconnected from reality.

By almost all generally-accepted measures, stocks are overvalued. However, they remain the principal product of the Wall Street hucksters in terms of return. Bonds are returning little, and, if there is any appreciable inflation, they will return nothing in nominal value.

Stocks go up. They also go down. Some do better than others, but, to believe that the entire market is making a conscious choice to wait until Janet Yellen drools and stutters her way through her annual congressional hearings, is a monumental fraud in thinking.

Those who are buying are buying. The sellers are selling. Mostly, it's computers doing all the work and there's no good reason, presently, to make any meaningful changes in any meaningful portfolio.

At least that's what it looks like, but we'll wait and see.

At the Close, 7/10/17:
Dow: 21,408.52, -5.82 (-0.03%)
NASDAQ: 6,176.39, +23.31 (0.38%)
S&P 500 2,427.43, +2.25 (0.09%)
NYSE Composite: 11,751.79, -1.19 (-0.01%)