As we labor along these summer trading days, awash in great anticipation of the next FED policy move, we can't help but bring to light some of the driving facets behind the equity, bond and currency moves. We believe that our readers must understand the simple fact that central banks are the biggest driver, not only as to the daily direction of bets placed, but as to the overall trends in general. We heard for years how the plunge protection team didn't exist. We heard for years that dope Steve Liesman, that FED butt kissing media spinning journalist tell us that the central banks don't directly affect the markets. Now after 9 long years of ZIRP and $15 Trillion dollar major central banks balance sheets (not including PBOC), the markets are as frothy as ever. We hear bubble talk after bubble talk, bonds are in a bubble, equities are in a bubble, Bitcoin is in a bubble.
Chair Yellen didn’t waste any time reassuring markets last week that the FED, despite their wherewithal to hike rates and shrink balance sheets, will remain mostly accommodative. She mentioned specifically that “the federal funds rate may not have to rise all that much further to get to a neutral policy stance.” Neutral, this term, always annoys us because it seems very relative. Neutral to what? Historical? Do we not live in unprecedented times or is QE just a normal everyday expected monetary operation now? Wasn’t it supposed to be temporary? Now some 9 years later still awash in some $200 billion in global central bank QE per month, the fed has decided that it’s time to move to a more “neutral” policy stance. Don’t even!