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The financial world waited nervously for Fed Chairwoman Janet Yellen’s speech in Jackson Hole, Wyoming today. The anticipation and tension was felt, as it is every month, in markets around the globe as investors expectations increased as the time drew closer for her to share her insights into the economy and the actions that the Fed would take. Speculation was rampant as usual. She might as well have spoken directly into the Hole at Jackson, because, once again, she said and did nothing.
The U.S. stock markets yawned (again) and went back to business as usual, much the same way the nation, and the world, does following a speech by President Obama. The S&P closed down by 0.20% at 1,988.40, and the Dow fell proportionately by 0.22% to 17,001.22. The NYSE had 1,931 decliners versus 1,173 gainers with 115 unchanged. The real tale, given the absence of any other earth-shaking news over the weekend, will be told as markets reopen starting in the Pacific Rim on Monday morning.
Let me sum up her speech
“I don’t really know what’s going on, and I don’t really know what to do about it.”
I swear this woman is the illegitimate child of Barack Obama and Hilary Clinton. She cited a “remaining slack in the labor market” as she described what she calls “under-utilization of labor resources,” for keeping the U.S. economy from breaking out of the doldrums. Luke Bartholomew of Aberdeen Assets Management Investment described her Obamaesque speech as “deliberately vague,” stating that “She’s saying the Fed might raise rates soon, but, then again. it might not.”
With comments from Yellen like, “If economic performance turns out to be disappointing and progress toward our goals proceeds more slowly than we expect, then the future path of interest rates likely would be more accommodative than we currently anticipate,” Bartholomew is spot on. Yellen exhibits no more leadership that Obama’s infamous red line for Syria. That was several hundred thousands of lives ago.
Investment decisions are hard enough as it is. Making them is even harder when the people in leadership positions don’t know what they are doing, where they are going, or how they are going to get there. It boils down to this: Fellow investors, we are on our own. Perhaps that’s not so bad. If we do our homework, we can become wiser than our teachers and we are able to make decisions in our own best interest without waiting for them.
Under-utilization? Are You Kidding Me?
Ms. Yellen and her witless fearless leader love to blame their ineptness on someone or something else. Yellen particularly likes to use unemployment, which she likes to say is near 6%. Of course, she likes to say that. It makes reality look more like a swimming pool filled with cotton candy (or whatever you imagine to be your dream).
The fact is that the number of unemployed people in the U.S. is not down. It is higher now than it was when this administration took office in 2009. Granted, there may be fewer people on the unemployment dole, not counting the masses on welfare, but the actual percentage of Americans out of work is more like 37%. As of the beginning of 2014 that figure stood at a record 91.8 million people.
In case the chart isn’t detailed enough, permit me to present a few facts that Ms. Yellen doesn’t want you to know. This information comes directly from the U.S. Bureau of Labor Statistics, in round numbers.
- The total number of employable workers in the U.S. is 247 million.
- The total number of employed workers is 155 million.
- That leaves the total number of unemployed at 92 million.
Unfortunately, the unwillingness of both Yellen and Obama to face facts and their preference to paint an entirely different picture just make it more difficult for the rest of us to make informed decisions about what to do with our investments.
