Fed Chair Janet Yellen Gives Bad News; Market Drops

[InTheLight]

Federal Reserve chair Janet Yellen testified before Congress today and was full of bad news.

* The labor participation rate is too low

* The number of people among the long term unemployed is at historically unprecedented high levels.

* Inflation is starting to pick up, but not enough to warrant raising interest rates (Wall Street is looking for a small rate hike).

* Wage gains are anemic (a sign inflation is not yet a concern.)

* Productivity growth is too low

* The housing sector has shown little recent progress, has leveled off and is disappointing this year.

* Small cap bio-tech stocks and social media stocks are overvalued.

* Economy seems to be picking up but "we have seen false dawns before."

This sort of testimony by the Fed chair has the potential to send markets downward. The NASDAQ, home of most small cap stocks, is down about 1%. However, the S&P500 is down about .5% and the Dow is down only .2%. I would have thought they would go down further. There's still a half day of trading remaining. We'll see.

 

[Revmitchell]

I guess this is where I say I told you so.

 

[InTheLight]

I guess this is where I say I told you so.

Yep. I guess this is where I de-feather the crow for my evening meal.

The amazing thing to me is that the market is shrugging it off. There must be some dynamite earnings reports waiting to be made public.

 

[Bro. Curtis]

ITL, stepping up and saying he was wrong. :thumbsup:

 

[thisnumbersdisconnected]

The amazing thing to me is that the market is shrugging it off. There must be some dynamite earnings reports waiting to be made public.

Or the market is no longer a true indicator of economic health.

 

[Revmitchell]

Well there is quite a few claims that a market correction is on the way. I hope not, at least not bad. We have got to learn to stop propping up the market in a way contrary to how the market itself works.

 

[InTheLight]

Well there is quite a few claims that a market correction is on the way. I hope not, at least not bad. We have got to learn to stop propping up the market in a way contrary to how the market itself works.

There will be a market correction, possibly 5% to 7% downward. The question is, when?

Agree that they need to stop helping the market, and they are doing so with the ending of the bond buying. The end game is a delicate balancing act but so far, it's working.

 

[InTheLight]

Or the market is no longer a true indicator of economic health.

I think it is a true indicator of economic health--a leading indicator. An indicator of the near term future economic health. We're not seeing the results of the run-up in the stock market in every day economic life as yet.

But yeah, there is a slight disconnect, or possibly a longer delay in the market affecting working people's lives.

 

[thisnumbersdisconnected]

I think it is a true indicator of economic health--a leading indicator. An indicator of the near term future economic health. We're not seeing the results of the run-up in the stock market in every day economic life as yet.

The markets' values overall have increased an average of 34% since 2009. Such growth in the past has forecast economic growth at or above 5%. Since 2009, we haven't seen overall growth in that amount. No, they are not accurate indicators anymore. They are manipulated too much by the government's influx of money into the economy and the brokerages buying on their own dime in order to influence outside buyers.

 

[InTheLight]

The markets' values overall have increased an average of 34% since 2009. Such growth in the past has forecast economic growth at or above 5%. Since 2009, we haven't seen overall growth in that amount. No, they are not accurate indicators anymore. They are manipulated too much by the government's influx of money into the economy and the brokerages buying on their own dime in order to influence outside buyers.

Hey, nice endpoint you picked there for your starting point. Yes, the market is up since 2009 because it DROPPED 45% from Sep '08 to Feb '09. Sheesh, you've got to stop cherry picking endpoints!

 

[thisnumbersdisconnected]

Hey, nice endpoint you picked there for your starting point. Yes, the market is up since 2009 because it DROPPED 45% from Sep '08 to Feb '09. Sheesh, you've got to stop cherry picking endpoints!

The New York Stock Exchange opened on May 17, 1792. Is that where you want me to start?

 

[Don]

ITL - way to man up. Good example for the rest of us.

I'd have to say part of the slow response is the lack of media attention. Just checked Drudge, CNN, Fox, and MSNBC; not a word about this. You'd think something like this, the conservatives would be jumping on so they could thumb their noses at the administration....

 

[thisnumbersdisconnected]

ITL - way to man up. Good example for the rest of us.

I'd have to say part of the slow response is the lack of media attention. Just checked Drudge, CNN, Fox, and MSNBC; not a word about this. You'd think something like this, the conservatives would be jumping on so they could thumb their noses at the administration....

Fox carried the Yellen hearing live, and has the video posted on Foxnews.com.