Fed Congressional Testimony Preview: Janet Yellen’s Shot At Redemption
By Tyler Durden
Via ConvergEx's Nick Colas,
Google “The Fed” and the search engine will offer to autofill your query with “surrenders”. That’s the result of a WSJ article from today with that title, but it also reflects market concerns that the U.S. Federal Reserve has abandoned its recently more upbeat take on the domestic economy. Well, we’ll get a chance to hear more tomorrow when Chair Yellen makes her semiannual monetary policy report to Congress. There’s not likely to be much in the way of new economic information on offer versus her Wednesday press conference, so the success/failure of this appearance will hinge on the tone she chooses to strike and the conviction investors hear in her testimony and in Q&A.
With so much chatter about the Fed “Losing credibility” with markets, this will be an important chance for Chair Yellen to set the record straight.
“There are no second acts in American lives.” That often cited quote reputedly came from the pen of F. Scott Fitzgerald. You hear it most often as the antecedent to something like “Except for” a public figure, fallen from grace, who magically reappears after a personal intermission to regain fame and glory. In fact, you would be forgiven for thinking that too many celebrities on the American stage have not just second and third acts, but tenth and twentieth ones as well.
The actual quote, from a Fitzgerald essay collection titled “My Lost City”, is “I once thought that there were no second acts in American lives, but there was certainly to be a second act to New York’s boom days.” That’s an entirely different sentiment from the soundbite quote, to be sure. There are clearly second acts, and Fitzgerald’s reference to New York City is especially apt since he was referring to the post-Jazz Age world of the 1930s. Since then, of course, the city has had more acts than a Shakespeare play.
In that spirit we turn to the Federal Reserve and its current Chair Janet Yellen – a policymaker certainly in need of a second act. The curtain came down on Act One yesterday, with her press conference post-FOMC meeting. By dint of both their reluctance to increase the Fed Funds rate and the reduction in longer term interest rate guidance, the U.S. central bank essentially ended all market expectations of a cycle of future rate increases. That inaction gave further credence to the market’s worry that the U.S. economy is stalling, and at a fairly high altitude. The ride down may not be pleasant.
True to Fitzgerald’s actual sentiment, Chair Yellen will get her chance for a second act come tomorrow at 10am she will be sitting in front of the Senate Banking Committee to give her widely followed semiannual monetary report. No, she will not have much new information to report compared to yesterday’s press conference. But she will have another chance to express her confidence in the U.S. economy and (perhaps) reinject the notion that …read more
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