At Alphaville Cardiff Brown wonders whether Fed Chairman Janet Yellen will remain consistent:
The passages about financial stability in the FOMC’s latest minutes were furthermore notable for how unthreatening the present conditions were portrayed as by participants — a potentially mildly elevated equity market, worries about real estate prices, a need to monitor lending standards, and that’s about it. These were countered by a recognition that the financial sector was better capitalised and that investors did not seem over-levered. The primary worry was a vague notion that a delay in tightening would in the future lead to “an intensification of financial stability risks or to other imbalances that might prove difficult to unwind.â€
Still, it’s certainly a reasonable topic for a Jackson Hole speech given the uncertainties that do pervade the relationship between monetary policy and financial stability. She is likely to address an issue raised by Bill Dudley and others, that overall financial conditions remain easier than expected despite the pace of the tightening cycle. But will Yellen also reinforce her earlier point that monetary policy is too blunt an instrument for mitigating financial stresses, or will she somehow alter that message in response to how the world has since changed?
There is another alternative. It may be that regardless of what she says that Janet Yellen doesn’t really believe the unemployment figures that her own organization, the Bureau of Labor Statistics, and the other federal agencies are coming up with.
Like her predecessors, Janet Yellen is a clueless idiot. It is mind-boggling that anybody pays any attention to anything anybody at the Fed says.
On the unemployment rate and other economic indicators, they were cooked when the president was Obama or Bush, and they are still cooked with Trump as president.
Real unemployment is still higher. The stock market is still overvalued. Banks are still insolvent.
Speaking of cooked……
These guys are peddling gold. But their little dissertation on pensions is spot on. The actual realized returns are scary bad.
http://www.zerohedge.com/news/2017-08-23/theyre-using-bernie-madoff-math-hide-crisis
There’s an additional, subtle point that goes unrecognized too frequently. You routinely encounter the statement that investing in stocks averages 7%. What they don’t tell you is that the average, median, and mode of annual returns are very, very different. You can go for 20 years without any returns and then over the period of a few years realize returns so high it averages 7%.
For pension funds that 7.5% needs to come from somewhere. If they don’t come from invested returns every darned year they must come from taxes. But that’s not the way the stock market works. Never has. Never will.
7.5% return every year for the next 5 years would mean a 32,000 DOW in 2022. Really?
That’s correct. And if you look at a CAPE analysis the implied required earnings growth to “grow into” current valuations just absurd. Even if you are an economy bull you have to be wild eyed on the economy to believe it. Worse, not only is the growth rate optimistic, you could have a good 5-10 year decline or flat market. You can’t even walk up the risk curve, chasing yield. This will be a real Class A shit show. Since those pension manager types are basically my customers I know what they think. They of course know all this, and they have no clue what to do about it except keep their heads down. Taxpayers of CA and IL beware.
As we are always on extension, we are about to file our last IL tax return, for 2016. We estimated fairly well, and are owed a $1,400 refund from the state. I’m thinking the chances of ever seeing that are 50-50. OK, I’m an optimist……..
But hey, at least we won’t have offensive statues around…..