Stocks Tumble: Fed Spooks Traders With Bubble Warning
by Tyler Durden
ZeroHedge.com
Apr 5, 2017
Was today the Yellen Fed’s Irrational Exuberance moment?
It started off so well: the blistering ADP payrolls report, the highest in over two years (despite disappointing PMI and ISM reports), sent stocks soaring off the bat with the Dow jumping nearly 200 points higher, rising as high as 20,887, and the S&P knocking on the all time high 2,400 door again, and AMZN to new all tim highs, and making some wonder if the reflation trade had returned.
Alas it was not meant to be, because while it took the market some time to digest the Fed’s minutes, the FOMC delivered one of its loudest warnings to date that it was focusing not so much on inflation or employment, but was seeking to deflate what even “some members” of the FOMC agree is a stock bubble, warning that stock prices are “quite high”, and warning that its forecasts face “downside risks” if “financial markets were to experience a significant correction.”
And while the dollar briefly spiked to the day’s highs in kneejerk reaction to the minutes, it then surrendered its gains after the minutes showed most officials backed a policy change that would begin shrinking the central bank’s balance sheet.
The weakness in the dollar meant that everyone’s favorite market-influencing carry pair would likewise suffer, and after breaking out above 111, the USDJPY tumbled as low as 110.70 once again threatening the key 110 support level.
The Rest…HERE
