Hear that sucking sound? It’s called draining confidence and a market sentiment & psychology shift
Remember all that confidence, beginning as a glimmer in the eye of Bernanke’s big brain (weird wording, but ever heard of the ‘mind’s eye’?) and tended with paranoid attention every step of the way by hands-on policy that simply refused to go away. Every time the stock market hiccuped there was the macro manipulator in chief; “the HERO” to legions of conventional stock market players. Well now that confidence is going away.
Just as Bernanke was left with Alan Greenspan’s toxic mess to clean up, Janet Yellen is dealing with the aftermath of Bernanke. She has really put a good face on trying to do the right thing as per a conventional economic recovery. As noted last weekend in NFTRH 381, I actually have a relative level of respect for her compared to some of her global counterparts. Okay, that is as doughy eyed as I’ll ever get toward a centralized monetary authority. This is all about confidence.
Here comes CNBC with the punch line…
That my friends, is another chink in the armor of formerly ironclad confidence this institution had rebuilt around itself in the form of conventional money managers and other peoples’ money.
As recession fears mount in the U.S., Fed Chair Janet Yellen conceded there’s a “chance” of a downturn ahead.
Oh really, she concedes that now? How about last summer when we, who have got to make our bones in this eff’d up market clearly illustrated the first signs of it?
Or several Semi book-to-bill ratio releases that were on display for months, for anyone who would care to make the effort of knowing reality?
Now all those conventional economists (including evidently, those at the Fed) are coming around?
And then the punch line…
She also said the central bank is studying whether negative interest rates would help should conditions worsen.
And so, confidence ratchets down one more big notch.