BS Baffles Brains

CPI-U came in negative this morning. Inflation continues to elude the Fed (a good thing, at least that attempt to further crush the working public is failing). Disinflation and now perhaps deflation make that most hated asset class ever more appealing. Just sayin’

There has been a unusual co-ordinated set of jaw-boning statements from various Fed folks, including Bernanke, in the last 24 hours stating that they expect rates to stay at effectively zero into perhaps 2016 or longer. One possible explanation is that the Fed is preparing markets for tapering by drawing a sharp distinction between tapering and tightening…reminding markets that tapering does not mean tightening. If they were getting ready to taper, such statements would make sense. Fed minutes will be released at 2 PM.

Meanwhile the pumping goes on. Jeremy Grantham’s recent comments proposed that fair value for the S&P was around 1000-1100 – in other words the S&P is currently about 70% over-valued. And don’t think that if it starts heading for fair value that it is going to stop there.

Edit: The Fed minutes commented that there would be tapering in the months ahead on better data. The stock market is mixed. Good luck with that “better data.” The only way they’re getting that is to get the fake data flowing again.

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