The party has gotten out of hand – thanks to all the free booze supplied by Ben Bernanke and Janet Yellen. Time to look for the car keys.
Rents and housing costs make up 30% of the Consumer Price Index. They’re its largest component. They’re soaring in real life. But not in the CPI.
San Francisco Fed: Investors are pricing in “a later liftoff date” for the federal funds rate and a slower pace of tightening than FOMC participants themselves.
The Fed’s policies have rewarded financial engineering at the expense of job creation.
Not everyone is irrationally exuberant.
Why would this bullishness extend to practically the entire globe?
With fundamentals and economic realities having become totally irrelevant these days, economists are reassigned to tout stocks.
“Here’s when US equity and bond markets will change direction: when investors come to fear the next Fed-talk.”
Over the long run (which is now), the math of that distortion just doesn’t work out.
The report – released on Friday when everyone was on vacation or getting ready to head out of town, and when no one was supposed to pay attention – was a zinger: US net capital outflows soared to $153.5 billion, the largest ever recorded.