US Federal Reserve

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The Market Has Its Head Buried Deep In The Sand

Posted with permission and written by Dave Kranzler (CLICK HERE FOR ORIGINAL)

In what was the clearest sign to date that the Fed is targeting the stock market bubble with its rate hikes (recall two weeks ago Goldman caused a stir when it suggested that the Fed had made a policy error by being overly dovish with its rate hike, which instead of tightening financial conditions, had the effect of a 25bps rate cut), today not one but two Fed presidents warned that the market is getting "a little rich", that "valuations may be a little frothy", and that the record "wealth to income ratio is a reason to keep raising

If you ever had any reservations about who's shilling for the Federal Reserve, look no further than today's vote on increasing oversight into the Federal Reserve, including an audit.

The bill was passed by way of verbal vote and will now be introduced to the House, where it will likely be killed by shills.

The Republican-controlled Committee on Oversight and Government Reform approved a bill earlier today to allow for a congressional audit of the Federal Reserve's monetary policy, a proposal Fed policymakers have opposed and likely faces a difficult path to final approval in the Senate.  Under the bill, the Fed’s monetary policy deliberations could be subject
to outside review by the Government Accountability Office. 

With the reflation trade seemingly dead, the logical outcome is that the "disinflation" trade will soon follow. However, as that would undo most of the recent gains, central banks will fight tooth and nail to prevent that from happening, but can they? As RBC's Charlie McElligott writes in his morning note, "some large players in the market believe that the Fed had indeed been incorporating anticipation of ‘fiscal policy", Trump policy which may now not be coming until late 2017 or early 2018 (if at all).