With all of the noise coming from general politics there’s hardly been any space left over for economic news. There’s nothing like a huge distraction to keep people’s minds off of how things are going in the areas which really matter the most.
So how are we doing?
One handy measure comes to us from what Barataria has taken to calling Yellen’s Dashboard. This is a list of the five most stubbornly bad indicators that were simply not turning around 3 years ago, despite many signs of improvement. With the Fed sending strong signals that rate hikes are assured in coming months they make a good place to start the conversation.
What happens in a Democratic-Republic when the most powerful person has an agenda which seems at odds with the legislative body?
We found out today when Janet Yellen, who is not at all orange, testified before the Senate Banking Committee for the first time since … well, really since all Hell broke loose. Financial issues have largely taken a back seat since the circus came to town and the opportunity to return to such a basic issue had the wonderful air or normality to it.
In a speech to the Economic Club of New York the most powerful person in the world, elections be damned, called back the need for continuing “ramp up” in the Fed Funds Rate. The stock market rallied as the happy days of last year returned and everyone had reason to believe that free money was on the horizon.
Funny, they don’t cheer like that for Bernie Sanders.
What is going on? Are we not going to raise rates this year after all? Has Yellen started channeling her inner Greenspan by saying as little as possible in the maximum number of words?
No, this is what we have to expect. It’s really all about China, which is to say all about currency conversion, and the much-hyped “dual mandate” of the Fed that’s really a much more complex triple mandate or more. And we all, sadly, have to stay tuned to find out what it really means.
Watching the stock market on a daily basis is a good way to go insane. If you doubt this, all you have to do is read the various explanations for the daily gyrations – which rarely make much sense. Nevermind them. Since the start of 2016 the market’s been in a serious funk, which is to say it’s had a major urge to get down.
The official explanation is “China”. Something about China, at least. We’ve never bought that here at Barataria, focusing instead on the positive news that surrounds us every day. No, we’re not joking. There is indeed positive news and the market reflects this – sort of, at least.
Like good funk, the story of the stock market today comes with a backbeat and a solid bass line. It’s all about how the vagaries of international finance flow through the news and the market with a beat that so infectious ev’rbody has to dance.
Before we can call the economy “good”, we have to be in a situation where good news is taken as unvarnished good news. And that seems to have finally happened.
Janet Yellen outlined in great detail exactly why interest rates not only have to start rising by the end of the year, but why they have to go up to around 2% before the Fed is done. The market responded positively, getting another shot of good news this morning. Has the monkey of cheap money finally been scraped off their backs?