Yellen to the Rescue

Here they come again.  The Fed is back with a giant fire hose to blow out a little brush fire.  I guess Yellen had seen enough of the rise in bond yields from 2.10% to 2.39%.  29 bps was all it took to go from hawkish(supposedly) to dovish.  Talking out of both sides of her mouth.  Saying the Fed will keep raising rates and that neutral rate is 3% and saying that not many rate hikes left till they get to neutral.

The market did overinterpret the last FOMC meeting when she kept to the script of balance sheet rundown and another rate hike this year.  That was just her staying on script, not really revealing what she had in the back of her mind.  We got the truth today.  She is worried about low inflation and worries about high asset prices is way down on the priority list.  The tightening theme of global central banks taking back liquidity was dealt a blow today.  It had become popular on TV to say that central banks tightening policy would keep stocks from going higher.  The market was offsides for a dovish turn by Yellen.

How quickly those emails from Trump Jr are forgotten.  Now the bulls will think its clear sailing.   Overall, the conditions are still the same.  I never was banking on a hawkish Fed to take down the stock market.  That's not going to happen this time around.  They are chicken littles who will coddle the stock market if it has a tantrum.  My bearish view was more fundamental to overvaluation, low economic growth, and investor positioning.   Those things are still there.  I would like to see a slight break above SPX 2450 to all time highs to put on my shorts.