Yellen Fed Speech from Jackson Hole

Posted: August 29, 2016 in Uncategorized

Finally we have the Federal Reserve speech that kept the market on suspense (or sleep) for the previous take.

No major news…but still a few interesting takes.

Chairman Yellen said that the economy is improving and now, still data dependent, there is scope for another rate increase.

So we could have a rate increase in September, but I am a bit skeptic about it as it is very close to the Presidential election.

There is quite a strict correlation between stock market behaviour in the quarter before the election and the outcome (Good Market favourable to Clinton/Obama) – so she could want to avoid being seen as partisan.

One of the important take outs instead her call for fiscal policy to do more.

What is fiscal policy? It is Government – so is she asking the Government to intervene as the Fed is reaching the limits of what it can do for the economy?

I personally think so and she is calling for help from the politicians. And i think she will get it next year.

Not because the politicians are listening to her – but because Brexit, Trump, Le Pens (the rise of populism as the media call it – or just democracy as it should be) are scaring to death the establishment.


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