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A "baby bear" market scared the Fed in breaks



The financial markets were collapsing with concern for a braking economy, and the Federal Reserve leader tried to assure investors that the central bank was getting modest.

995, shortly after the Fed had stopped a year-long tightening campaign that investors feared might have gone too far.

But it could also have been Janet Yellen, who as chair said this early 2016 not long after a controversial December 2015 rate hike left markets unwavering: "I consider it appropriate for the committee to be cautious about adjusting policies … The decline in some indicators has increased the risk of" growth falling. " In that case, the return on inflation of 2 percent may take longer than expected and may require a more accommodating attitude to monetary policy. "

Not so different from the chairman Jerome Powell last week by using a form of the word" patient "eight times in conveying political flexibility after the December appreciation – and signals from several coming – unknown markets.

You get the idea In over three decades and four Fed chiefs, there have been half a dozen sharp market downturns driven by a growth hazard, outside of a US recession, in each case easing market pressure on valuation pressure, punctual investor confidence, leading to moderate growth and domestic bonds – and forced the central banks to stop austerity programs or even to ease the policy.

The bullish case for stocks today rests on the expectation that the 20 percent jump over the year will show another of these "baby bear" – The markets, which were a fake recession alarm, will pave the way to a "fair" Goldilock growth phase and drop stock prices to new heights.

[19659003] Tony Dwyer, strategist at Canaccord Genuity, has characterized the end of the 2018 collapse as the fourth "non-recession market crash" of the last four decades, using 1987, 1998 and 2011 as relevant precedents – with bullish consequences for the longer term but a hint that another short-haul retreat might be needed.

The 20 percent break in the S&P 500 at the end of December, Dwyer claims, "more than reducing the slower domestic and global economy, as long as the Fed stops making political and communications mistakes, the Trump administration resolves the trade conflict with China. and the yield curve remains positive. "


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