Why Didn't Some One Tell Janet Yellen To Shut Up When She Mentioned Negative Rates

Gold

I’m going to admit that I am more than a bit confused by last week’s testimony from Fed Chair Janet Yellen.

The question that has been keeping me awake at night is why, if the Fed sees a rosy, robust domestic economy, is the committee keeping the idea of negative interest rates on the table? Maybe this is why the markets just didn’t believe her when she says that economic recoveries “don’t die of old age.” The way markets reacted, you would think that investors were afraid that she was going to kill the recovery before it even got to a retirment home.

The more she talked the lower equity markets fell and the more gold -- that ultimate safe haven -- rallied. I’m surprised that someone didn’t stand up in the middle of her testimony yelling “shut up, shut up, shut up! Look at what you are doing to my portfolio!” Of course if that happened, C-span would definitely get a lot more views.

But I digress.

So are we headed for a recession or not? Last year HSBC said the U.S. economy is closer to a recession than not and what is worse is that the Fed has no ammunition left to deal with another financial crisis. Well it is almost one-year later and things don’t seem to be getting a lot better. Okay employment -- a Fed mandate -- is up but most of the gains are in service jobs. Of course nobody has been able to tell me how you can raise a family on a minimum wage job and tips. How are these gains good for long-term economic growth?

To try to find an answer to my recession question I decided to rummage through twitter to see what people are thinking. The views are mixed at best but I thought it would be interesting to share some of the tweets.

#U.S. economic fundamentals remain solid! Global financial markets on edge in 2016, not signaling #recession here. https://t.co/MYIh6FQz11

— PNC News (@PNCNews) February 16, 2016

There may be #recession concerns when the economy is above capacity but we're not there yet https://t.co/KGjUnDX7yl pic.twitter.com/K799ingqDy

— PIMCO (@PIMCO) February 13, 2016

The fact that #GDP was relatively strong right before that last 2 recessions underscores how the #economy can weaken very quickly
— Joseph A. LaVorgna (@Lavorgnanomics) February 12, 2016

#Recession fears are exaggerated, but negative feedback from capital markets threatening real #economy. #DrStephan
— Deutsche Bank (@DeutscheBank) February 11, 2016

#BalticDryIndex is a gauge of rates to #ship dry bulk. Some say it is a barometer for global #economy. pic.twitter.com/wwYGMxrpHv
— Prof. Steve Hanke (@steve_hanke) February 11, 2016

Stockmarket emotions, we are gradually approaching denial phase. $SPY S&P500 #stocks #recession #crash pic.twitter.com/5STnL2UjWh
— Andres (@AndresInEast) February 7, 2016

Any way you slice it growth is slowing & recessionary data is flowing out #USrecession ISM Services still above 50 pic.twitter.com/zSlTi4Jou7

— Max Maxwell (@maxjcm) February 1, 2016