FED NOW TARGETING ASSET BUBBLES, FINANCIAL CONDITIONS

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*FISCHER: HIGH ASSET PRICES MAY LEAD TO FUTURE STABILITY RISKS

Breaking News: The FOMC is Targeting Asset Bubbles – Financial Conditions

“To us, the Fed is targeting Financial Conditions, which is a circular feedback mechanism to the equity markets, given its overall construction. It’s as near to ‘bubble targeting’ as they can get, we recommend clients short bonds.”

Bear Traps Report, June 26, 2017

Bond yields spiked today on a hawkish turn from the Fed and ECB Tuesday.

Governor Stanley Fischer was not on the calendar today and this speech was just published on the Fed’s website. He sees a “notable uptick in risk appetites” that warrant “close monitoring” as “price-to-earnings ratios now stand in the top quintiles of their historical distributions, while corporate bond spreads are near their post-crisis lows.”

Back Up in Bond Yields, Copper, Iron Ore, and Oil

Reflation RevivalYellen’s Hawkish turn has helped fuel a global reflation revival.  Just when Wall St. threw in the Reflation towel, she started a comeback.

Yellen’s Legacy

We believe Chair Janet Yellen is setting up her FOMC exit strategy – if President Trump says “goodbye Janet” in February … <read more here>