Yellen’s Remarks Cause Markets To Anticipate The Impossible – Ep. 211

* The stock market continues to ride the Trump wave to new highs, in fact the Russell 2000 hit an all-time record high today * The enthusiasm for stocks not being dampened by the carnage in the bond market * We now have the yield on the 10-year treasury up at around almost 2.3 * And the yield on the 30-year now, just below 3% - 2.99 * Yields are still low, but nowhere near as low as they were * And of course, nowhere near as low as they're headed * It's not just the fact that bond yields are rising, but the rapidity with which they're rising * And the technical damage that is being done * This again, as I said in an earlier podcast this could be the beginning of an explosive move up in interest rates * And right now, nobody seems to care, least of all Janet Yellen * She testified today - her supposedly hawkish testimony is one of the reasons that gold sold off today and the dollar rallied * Before she spoke, gold was positive on the day * She did say it would likely be appropriate to raise rates "soon" * And everybody interprets "soon" as, the next chance they get, which is less than a month from now * Although, if the Fed is really determined to raise interest rates in December * Why not just say it? * Why say it may be appropriate to raise them soon? * Just say, "It's appropriate to raise them in December" * They still want to leave themselves plenty of wiggle room * Even though the markets are saying it's a 95% probability * The Fed is still being very coy and data dependent * I think what's more important for the markets is the fact that Janet Yellen acknowledged * That if we get a fiscal stimulus - which she doesn't even think is needed - * She pointed out that we have a growing economy, everything is good, the unemployment rate is very low * And that stimulus now in the form of tax cuts or extra government spending could overheat the economy * And that she will have to adjust her monetary policy based on what Congress and President Trump ultimately decide to do * That's what's scaring the bond markets, because what Yellen is saying, is that * If Congress and Trump want to step on the gas, she's going to have to tap on the breaks * To prevent this thing from overheating, meaning that with unemployment already so low * Any stimulus now, risks making inflation too high * Meaning that the Fed would have to act to rein it in * Even though she still suggests that the pace of rate hikes will be slow * She's implying that the pace will pick up if need be to offset the stimulus effects of tax cuts and spending increases * And that is what is rattling the credit markets * But what Janet Yellen or nobody else seems to understand is that any significant rise in long-term interest rates will crush this bubble economy Our Sponsors: * Check out FRE and use my code LISTEN20 for a great deal: https://frepouch.com * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy