This time it’s different?
Over the years we became accustomed to the growth of markets and shopping for fall. However, the recent sale due to fall in the Dow more than 200 points, a concern of investors.
The main reason lies in the fact that to be the end of the Fed’s policy ultrasoft, and short-term interest rates rise.
Consider the dynamics of interest rates on 5-year bonds, which reach multi-year highs.
David Zervos of Jefferies has long argued that stimulating the Fed’s policy plays into the hands investoram- “bulls”.
Recently, however, he seems to have changed his tone, titled his last note as follows: “The dollar spoils the whole raspberries Fed.”
“It was supposed to be a holiday. Quantitative easing comes to an end, and it worked. Committee of the Fed’s open market operations has done a great job and now can make a “victory lap”, but Yellen, Evans, Dudley and Lockhart will have to walk on shaky ground.
Their performances this week sounded like a tocsin, not fanfare. And their meaning was ambiguous complex. On the one hand we have heard – “let’s not get ahead of ourselves,” and on the other – “let’s get ready to raise interest rates, which predicts the market.”
Zervos emphasizes that he does not belong to the “bear” camp. He simply believes that things can go downhill if the Fed carefully “releases the gas pedal.”
Finally, it is certain that the Fed will understand it, and we will return to the middle, when the economy is “not hot and not cold,” and everything will happen smoothly. But for now, he predicts uncertainty and volatility.