SEP 22, 2016
TradeSnoop explains to us that After proclaiming that the case for a rate increase had strengthened in her Jackson Hole speech,
Janet Yellen and the FOMC left interest rates unchanged yesterday. Slowing growth and the Federal Reserve, easy money gravy train are the only bull catalysts left for the stock market.
The Federal Reserve is attempting to do exactly what the BOJ did beginning in 1999. In the middle of 2006, after more than six years of ZIRP and five years of several rounds of QE, the BOJ thought that economic conditions were good enough to begin "liftoff". They were "gradual" just as the Fed has been since the first hike in December. The idea of lower for longer started in Japan a decade ago. We all know how that has worked out. The reason is the same as now, they mistook the absence of an economic contraction for the beginning of renewed growth. They are seeing what they want to see. For Japan it was CPI, in the Fed's case it is the official unemployment rate. Nothing more than confirmation bias. Neither were or are able to admit that stimulus doesn't work. They believe that if it isn't working now they need only do more of it. They want to remain in power as opposed to admitting failure. They can't dare admit that a true recovery can happen without them. More importantly, they can't stomach the thought that it won't happen until they move aside.