So what is the relationships between these two market moves? The Fed seems to want to move back to Warren Harding's normalcy. ZIRP for so long isn't normal. But how normal is a cratering equity market-it's been cratering for a month?
Will Stephen Williamson say that this proves we need an rate hike to increase bond yields which will lead us to a rising stock market?
What we are seeing is that a tanking China market, falling interest rates, and a tanking oil market are correlative with a falling US equity market. As I suggested in my last post, a real worry for Hillary-as opposed to the fake worries about her emails or Bernie-is that this selloff in equities is a harbinger of a slowing US economy.
http://lastmenandovermen.blogspot.com/2015/08/how-sanguine-if-fed-this-morning.html
I'm still a Hillary bull but this is where the pessimistic case for her resides.
It will certainly be watched and anticipated when Fed Vice Chairman Stan Fischer speaks later this week. He is a relative dove I believe and we dearly need doves right now.
http://www.cnbc.com/2015/08/24/10-year-bond-yields-break-below-2.html
Krugman looks at the question of who could have predicted lwo interest rates.
http://krugman.blogs.nytimes.com/2015/08/23/nobody-could-have-predicted-interest-rates-edition/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs®ion=Body
Scott Sumner would certainly point out that he's been saying we're in a new secular age of low interest rates.
As to who's right Sumner who wants NGDP and no stimulus or Krugman who wants a 4 percent inflation rate and fiscal stimulus I'd take either at this point. As Larry Summers warned yesterday the Fed is about to make a big mistake:
"Will the Federal Reserve’s September meeting see US interest rates go up for the first time since 2006? Officials have held out the prospect that it might, and have suggested that — barring major unforeseen developments — rates will probably be increased by the end of the year. Conditions could change, and the Fed has been careful to avoid outright commitments. But a reasonable assessment of current conditions suggest that raising rates in the near future would be a serious error that would threaten all three of the Fed’s major objectives — price stability, full employment and financial stability."
Will Stephen Williamson say that this proves we need an rate hike to increase bond yields which will lead us to a rising stock market?
What we are seeing is that a tanking China market, falling interest rates, and a tanking oil market are correlative with a falling US equity market. As I suggested in my last post, a real worry for Hillary-as opposed to the fake worries about her emails or Bernie-is that this selloff in equities is a harbinger of a slowing US economy.
http://lastmenandovermen.blogspot.com/2015/08/how-sanguine-if-fed-this-morning.html
I'm still a Hillary bull but this is where the pessimistic case for her resides.
It will certainly be watched and anticipated when Fed Vice Chairman Stan Fischer speaks later this week. He is a relative dove I believe and we dearly need doves right now.
http://www.cnbc.com/2015/08/24/10-year-bond-yields-break-below-2.html
Krugman looks at the question of who could have predicted lwo interest rates.
http://krugman.blogs.nytimes.com/2015/08/23/nobody-could-have-predicted-interest-rates-edition/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs®ion=Body
Scott Sumner would certainly point out that he's been saying we're in a new secular age of low interest rates.
As to who's right Sumner who wants NGDP and no stimulus or Krugman who wants a 4 percent inflation rate and fiscal stimulus I'd take either at this point. As Larry Summers warned yesterday the Fed is about to make a big mistake:
"Will the Federal Reserve’s September meeting see US interest rates go up for the first time since 2006? Officials have held out the prospect that it might, and have suggested that — barring major unforeseen developments — rates will probably be increased by the end of the year. Conditions could change, and the Fed has been careful to avoid outright commitments. But a reasonable assessment of current conditions suggest that raising rates in the near future would be a serious error that would threaten all three of the Fed’s major objectives — price stability, full employment and financial stability."
So is a crashing US equity market thanks to a crashing Chinese equity market an unforeseen development or not?
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