Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
JOHNSON & JOHNSON (JNJ) Big Pharama AI Mega-trend Investing 2020 - 25th Jan 20
Experts See Opportunity in Ratios of Gold to Silver and Platinum - 25th Jan 20
Gold/Silver Ratio, SPX, Yield Curve and a Story to Tell - 25th Jan 20
Germany Starts War on Gold  - 25th Jan 20
Gold Mining Stocks Valuations - 25th Jan 20
Three Upside and One Downside Risk for Gold - 25th Jan 20
A Lesson About Gold – How Bullish Can It Be? - 24th Jan 20
Stock Market January 2018 Repeats in 2020 – Yikes! - 24th Jan 20
Gold Report from the Two Besieged Cities - 24th Jan 20
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Fed Officials Say More Hikes Are on The Way, Markets Disagree

Interest-Rates / US Interest Rates Jul 05, 2017 - 03:14 PM GMT

By: MoneyMetals

Interest-Rates

By Clint Siegner : Federal Reserve Chairwoman Janet Yellen says she is planning more hikes in the Fed funds rate, but you wouldn’t know it by watching the markets. So far, the response in foreign exchange, bonds, and equities isn’t what people expected.

Markets have always been notorious for behaving unpredictably.

But in an age when central bankers micromanage virtually all markets, the behavior could be the result of careful planning. Maybe the recent market action was only unpredictable for those of us outside of the FOMC conference room.


Officials hiked rates in December, March, and June. Despite that the U.S. dollar has fallen to its lowest levels in more than a year.

The DXY index peaked just above 103 in December and flopped to near 95 last week.

The bond markets also aren’t responding as expected to the recent hikes or the threat of more to come. 10-year Treasury yields bumped up immediately following the November election, but have been bouncing between 2.25% and 2.5% ever since. At the moment, the yield is near the low end of that range.

The same is true for stocks. Higher borrowing costs for consumers and businesses should be on the way. Couple that with the slew of poor economic data, including lackluster GDP growth, and you might wonder why in the world stock investors have been so enthusiastic.

There are some who wonder if the Fed has lost control of the markets. If that is true, it sure seems to be working in their favor.

Yellen and company are making headway toward “normalizing” rates and regaining some dry powder. And the dollar, which many officials feared had grown too strong, is falling. Stocks have surged to record highs, and interest rates for consumer loans – including mortgages remain exceptionally low. Serendipity.

The whole thing smells more than a little fishy. The trouble is it’s only a matter of time before the geniuses in charge at the Fed make a mistake and the bubbles they have been blowing explode with dire consequences – once again.

As Jim Rickards pointed out on last week’s Money Metals Podcast:

The Fed is blundering once again. They can't seem to get anything right. That's not really surprising when you have the wrong models, obsolete models, you'll get the wrong policy every single time. But the economy's weak. It's getting weaker. We may be in a recession sooner than later. The market looks vulnerable and now the Fed wants to launch this major tightening program. I think it's nonsense to think that won't have some very bad effects.

Our skepticism ratcheted even higher last week when Janet Yellen announced she does not expect another financial crisis in our lifetime. She’s confident adequate controls are now in place and the lessons of the past have been learned.

They haven’t. She and the rest of the central planners at the Fed don’t understand the leading role they played in creating the dot com bubble or the real estate bubble behind the 2008 financial crisis.

She isn’t particularly concerned about the surge in her organization’s balance sheet, metastasizing private sector debt, and the trillions added in government borrowing since the last crisis.

Yellen ought to sound more like Susana Mendoza – the Comptroller in the financially teetering state of Illinois. The state is grappling with insolvency and Mendoza is sounding the alarm.

Yellen, meanwhile, is feeling quite self-assured instead. It’s the sort of hubris we’ve seen before from Fed bankers – right before the wheels come off the economic cart.

By Clint Siegner

MoneyMetals.com

Clint Siegner is a Director at Money Metals Exchange, perhaps the nation's fastest-growing dealer of low-premium precious metals coins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon, puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

© 2017 Clint Siegner - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules