by Kurt Kallaus
Hold the presses: the bond bear market has been averted!
Yesterday’s non-decision on the Federal Funds Rate was a surprise only to the intractable 12% of myopic analysts who want the Fed to get out of the business of printing dollars regardless of economic risk. The most interesting comment by Fed Chair Janet Yellen was her admission that she and her prestigious voting members don’t have a clue why inflation and capital investment spending have not returned to loftier levels.
Yellen: “Investment spending really has been quite weak for some time and we are really not certain exactly what is causing that. … the weakness in investment spending extends beyond that sector (declining oil drilling activity) and I’m not certain of exactly what explains that …”
Wow! Really? One may ask how theses elite economists can expect a significant 250 basis point credit tightening over the next couple of years in an economy muddling along just above “stall” speed with no clue why inflation and capital expenditures have failed to rise as expected from their massive monetary stimulus.