Market View – Feeding Out Of Yellen’s Hands

I do not really bother about all those editorials we read about America losing her political clout on planet Earth.

Bernie’s analogy of the Romance of the 3 Kingdoms in his Ad Hoc Commentary -China Russia reach historic gas deal, Europe should be fearful, could not be more appropriate.

As far as the global markets are concerned, the US Federal Reserve and her figurehead, Janet Yellen, are calling the shots.And it is not just the Fed, its the Fed reporters who interpret the Fed who determine

And don’t think it does not affect the average private sector employee too, wherever they all are because their employers depend on Yellen’s effect on their stock price and interest expense.

Who says the US did not do a good job of conquering the world ?

Like I said 2 weeks ago, the Fed’s job is already done. Because we have successfully inflated our way out of debt by astonomically bumping up capital/wealth.

That is as long as they cooperate and leave things as they are.

And if you are really concerned about preserving your wealth, there is no better time than now to start learning to read every single bit of the April Fed Statement released last night which managed to move markets more than our own central banks or government can.

Overall, the strategists and key reporters have deemed it Dovish which is good for stocks and bad for the USD.

New developments that the market is still digesting.

1. Geopolitical risks
2. Possible top in the housing recovery
3. Concerns on increasing risk taking and excessive leverage in the financial markets
4. Poor labour markets – low participation rate, underemployment and slack

and the grand one …. They still do not know how to exit the markets ! except that they needed further testing and discussion.

So we are back to the  “new neutral” slow and sluggishingly growing economy.

Half the world is on zero interest rate policies and money is looking for a home.

That college grads can IPO themselves for  USD 70k for installment payments of  6.94% of their earnings over 10 years; professional footballers are IPO-ing themselves for 4 mio for installments of 10% of earnings for 10 years and; M&A deals going for crazy premiums, I say the world is in a happy trigger happy oblivion.

The rally shall go on as we beat our chests to the missed opportunities to double our investments, chasing bonds, stocks and real estate.

There is every chance of a further rally in the equity markets globally from here as I have explained in the Fed’s Job is Done piece. Capital/wealth begets wealth and wealth is based on expected returns which is based off zero interest rates.

The only sadistic angle is that things will fall apart when the US economy really improves and rate hikes come our way which is a mind warp – that asset prices correct when things get better.

I expect the S&P 500 to break 1900 and break its record high set this month of 1902 and for US bond yields to head higher.

Good luck !