Yellen’s Feet Were Always Cold – Ep. 152

* Happy St. Patrick's Day everybody and to those of you who have been waiting since yesterday for this podcast, you won't be disappointed
* Yesterday I did an interview with Liz Claman at Fox Business News and I did respond to the Fed's decision. That video is up on my YouTube Channel.
* The Fed did not raise interest rates, which didn't surprise a lot of people, but what did surprise a lot of people was the the Fed indicated, based on their Dot Plot, the consensus is that the Fed now sees two rate hikes coming in 2016
* If you recall, at the end of last year and earlier this year, the Fed was still projecting 4 rate hikes in 2016
* What I said from the very beginning is, "No chance."
* In fact I still thought it was more likely that we'd get a rate cut
* Now it's two down and two to go, because now the Fed is only pretending that they will raise rates twice this year instead of pretending that they're going to raise rates 4 times
* What's really interesting now is how the Fed is starting to lose credibility that it never should have had
* Steve Liesman asked Janet Yellen a good question: He said, what about your credibility - you said you would raise rates 4 times and now it's 2 times, and you said you were data dependent and unemployment is below 5%, creating 200,000+ jobs per year and the core CPI is up 2.3%
* He said, if you're not raising rates now, under what circumstances will you raise rates?
* Janet Yellen didn't really answer the question, but I thought she was thinking, "Don't you understand, we never intended to raise rates."
* I pointed this out from the beginning: The Federal Reserve never said that they would raise rates 4 times. They said, based on our economic forecasts, this is what we think is going to happen - BUT if we're wrong, it's not going to happen
* Janet Yellen said to Steve Liesman, "Look, these dots don't mean anything - this is what we're thinking at a moment in time, but it's not a promise."
* For some reason, everybody assumes that if the Fed thinks the economy is going to get better it will get better, in fact, if anything, since the Fed's track record is so horrific, if the Fed thinks the economy is going to get better, it's probably going to get worse, and so they are not going to raise interest rates the way they're pretending
* One of the reasons the Fed is pretending that the economy is good is because that's the official line of the Obama Administration: "The economy is good, and if you say it's not good, you're peddling fiction."
* Yellen probably wanted to say to Liesman,"Steve, we're not raising rates because the economy is lousy."
* The fact that they don't raise rates is the proof that they know that the economy is lousy, but they don't want to say it, so Janet Yellen is saying "Read between the lines"
* When I'm listening to all the coverage about the fact that the Fed didn't raise rates, the reports say,"Janet Yellen chickens out", "Janet Yellen gets cold feet"
* That's not the point. Her feet were always cold. The Fed never intended to raise rates.
* If they were planning to do it they would have done it
* This is all part of the extend and pretend charade
* In fact, in my Fox Business News interview with Liz Claman, I was debating Andy Brenner who holds that the Fed will raise rates 2 or 3 times this year
* I said, "If the Fed was going to raise rates, they should have raised them yesterday."
* Brenner responded that the market wasn't prepared for it
* I said the Fed is not supposed to be market dependent, it is supposed to be data dependent
* The market may never be prepared to raise rates - look at what happened the last time, the market got off to the worse start in the history of the market
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