Thursday, September 22, 2016

Yellen Comment

I wanted to get this out yesterday, but I actually forgot to hit the "publish" button. Yeah I know embarrassing.

I was listening to Janet Yellen's press conference to see if she gave any additional clues to interest rates. The reason is some of the names I'm looking at are rate sensitive. Sorry I can't let you know about each pick I'm eyeing!! It would ruin the surprise! Either way remember a few weeks ago in a weekly review when I talked about the central bank having no clue?

Well, Yellen just reinforced the reason why you can't put to much faith or credibility in any central bank. Here is her actual comment.

“I can assure you that any specific projections I write down will turn out to be wrong, perhaps markedly so.” – Janet Yellen

Yep there it is clear as day. Central bankers actually have no clue just like most of us. They are playing a guessing game, and use the data the best they can to guide decisions. Furthermore while they are currently projecting the economy to grow mildly around 2%, in theory they could be way off. Growth could skyrocket to 5% or crash to -5%. Their response would be - "Well we did our best". That'd be it.

Just some food for thought on this first day of Autumn. Enjoy the change in seasons! 

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