Authored by Kevin Muir via The Macro Tourist blog,
Bernanke presided over the Great Financial Crisis of 2008. Greenspan had the 1987 crash, along with the 2000 DotCom bust. Volcker had the bond debacle of the early 1980’s and the subsequent Latin American debt crisis.
For the past 35 years, every Fed Chairperson has been tested with some sort of financial event.
Until now…
Two weeks after BofA's Michael Hartnett previewed (and timed) not only the "Great Fall" of stocks, but also explained that the Fed and global central banks are now in the business of making the "rich poorer", he is out with a new note which looks at the Fed's latest U-turn, which has unleashed the latest market buying spree, warning that "further upside in risk assets will create problems later in the year" (for three reasons he lists out), and concludes that "ultimately, we believe the extremely strong performance by equities and bonds in H1 is very unlikely to be repeated
Authored by Axel Merk via MerkInvestments.com,
The Fed’s “balance sheet reduction” may have profound implications for the dollar, gold, stocks and bonds. We’ll provide an outlook...
It is said forecasts are difficult, especially when they relate to the future. Investors might want to pay attention nonetheless, not so much because I believe I have a crystal ball, but because investing is about managing risk. And there’s a risk that I’m right.
Quantitative Tightening
Fed Chair Yellen will be testifying to the House Financial Services committee at 1000EDT, followed by testimony tomorrow before the Senate Banking Committee (the testimony for both events is likely to be identical, as it has on previous occasions), however her prepared remarks will be released 90 minutes earlier, at 8:30am. Courtesy of RanSquawk, here are the main things to look for in her prepared testimony as well the subsequent Q&A.
The dollar was broadly weaker after dovish comments from Fed Governor Lael Brainard amid reverberations from reports of Donald Trump Jr.’s contact with a Russian lawyer; European equities rebounded with oil while S&P futures were 0.2% higher at 2,428; Treasury yields are 1-2bps lower across the curve with the 10y at 2.346% ahead of Yellen’s much anticipated testimony this morning (House today, Senate tomorrow) for further clues on the trajectory of monetary policy while the Bank of Canada is expected to hike rates later.