In the face of another crisis on Wall Street (plunging oil prices and Russian ruble panic), Fed Chair Janet Yellen eased investors’ fears by describing the Fed’s willingness to be “patient” in raising rates, adding that the U.S. economic recovery still needs support from Fed stimulus. Yellen’s pro-stimulus comments signaled that the Fed would most likely maintain its ultra-easy monetary policy in the near-term, sparking a 500-point Santa Claus Rally on Wall Street and higher oil prices (now back to $57 a barrel). There is no doubt that the Fed chairwoman is concerned that a bear market on Wall Street will handicap the fragile U.S. recovery. That suggests more easy money as we head into 2015. As one Wall Street analyst put it, “As long as the Fed is targeting another bubble in stocks in the name of a ‘wealth effect,’ we can expect this dance to continue.”
Posted on: Wed, 31 Dec 2014 02:32:06 +0000
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