Wednesday was not just another day in the markets. It wasn’t just another Wednesday. The FOMC 2-day meeting was ending, which always makes it a special day. Wednesday, however, was also Janet Yellen’s last formal day as the head of the Fed and the business end of the Fed: the FOMC.
Well, a (very) old friend of the Fed felt it was necessary to make a comment. That friend was Alan Greenspan (yes, he never goes away) who felt obliged to say that the stock and bond markets were BOTH in a bubble, and that the bond bubble would be a much larger problem. Mr. Greenspan is quite correct on this score: the bond bubble is a MUCH BIGGER PROBLEM than a stock bubble is now..or ever could be.
Mr. Greenspan said many things on Bloomberg TV today, but when he said the following… markets moved. The old’boy still has some swag, because when he said the following…markets tanked.
“There are two bubbles. We have a stock market bubble and a bond market bubble. At the end of the day, the bond bubble will be the big issue.”
That’s not much of a statement..so it sure shows how much the market is really on pins & needles when it’s not being driven straight up by a central bank!