What If You Aren’t The Only One In Control Of The Water In Your Glass?
Janet Yellen spoke to congress this morning. Here’s what some are reporting: “Ms Yellen said…that ditching the patience language ‘should not be read as indicating (alt) that the Committee will necessarily increase the target range in a couple of meetings…the modification should be understood as reflecting the Committee’s judgment that conditions have improved to the point where it will soon be the case that a change in the target range could be warranted at any meeting.’” “In general, she said that an interest rate hike will be appropriate when the Fed can be ‘reasonably confident’ of inflation moving toward its 2% annual target. During her testimony, she emphasized that the Fed would soon have the flexibility to raise rates at any meeting. A June rate hike is widely anticipated at present.” Meanwhile, some are taking notice of the Fed’s increasingly global approach to monetary policy: “the internationalization of the Fed’s outlook is palpable, and reflects in part he inclinations of the central bank’s influential new vice chairman, Stanley Fischer. Mr. Fischer has an array of international policy experience as former head of the Bank of Israel and deputy managing director of the International Monetary Fund during a time of turmoil in emerging markets.” Also, it’s worth pointing out that being totally wrong on interest rates isn’t a new thing: “Forecasters are missing a change in the structure of the economy. Two candidates for why this is happening are a significant increase in global liquidity and what the economist Larry Summers has dubbed ‘secular stagnation.’ Globalization and the spread of so-called financialization — the growth of interconnected financial markets in economies across the globe — have led to a significant increase in the sheer amount of capital and thus the stock of loanable funds. That Increased supply has lowered the cost of capital in ways the models are missing.”
“U.S. officials are investigating at least 10 major banks for possible rigging of precious-metals markets.” (alt) The DOJ will be “scrutinizing the price-setting process for gold, silver, platinum and palladium in London…until last year, prices for gold, silver, platinum and palladium were set using a decades-old practice of once- or twice-a-day conference calls between a small group of banks.” Interesting to note that “the U.K. Financial Conduct Authority and German financial watchdog BaFin reviewed the precious-metals benchmarks [last year] but closed their inquiries without finding evidence of wrongdoing.” Meanwhile, “copper’s gyrations (alt) have left analysts unusually polarized over where its price will go next…’We regard this pessimism among market participants to be exaggerated and expect prices to recover significantly just as soon as sentiment among speculative financial investors shifts,’ Commerzbank said.”
“The members of Germany’s biggest union, the metalworkers, have won a 3.4 percent pay rise for 2015. It is the biggest gain in years, and at least three times higher than the inflation rate. The deal is likely to be a bellwether for other sectors.”