Lest I become convinced of my forecasting ability.
Early trading in Tokyo and Hong Kong show increases, up 2%+. despite these developing stories.
From Janet Yallen today: “The financial and economic firestorm we face today poses a serious risk of an extended period of stagnation — a very grim outcome,” she said. “Even with vigorous Fed action to restore credit flows, an extended period of economic weakness is likely.”
In the United States, Yellen referred to the vicious cycle, whereby weakness in the U.S. economy intensifies distress in the financial sector, and vice versa.
In both speeches on Sunday Yellen’s highlighted a risk that, as inflation expectations fall and benchmark rates are held near zero, “real” interest rates will actually rise, at the worst possible time.
“A decline in inflationary expectations when economic conditions are weak is pernicious … because any downdrift in inflation expectations leads to an updrift in real interest rates and a tightening of financial conditions,” she said.
And this from Singapore tonight:
” Oil CLG9 jumped more than 3 percent on Monday after an
Iranian military commander reportedly called oil producers to
halt supplies to Israel’s supporters over the latter’s ground
offensive in the Gaza Strip. There were also concerns over the
deepening Russian gas supply row.
