Video-June-24-2013-Archives-Daily-Show

Fisher made it clear he believed bubbles had developed in a number of financial markets, mentioning emerging markets and real estate investment trusts. He also noted that companies issuing bonds with a triple C rating, which is junk status, could now borrow for less than 7 per cent.

Meanwhile, as predicted here, China equities have entered a bear market. This is a dangerous sign for other economies, especially the United States, which is China's chief partner for not just exports, but imports, too. (Leaving aside energy shipments.)

Surprisingly, this could end up being a bit of a boon for gold, since risk has re-entered many markets in many parts of the world. Junk bond funds and freelancers have been absolutely hammered by the Fed statement. In fact, bonds in general have been hurt. There has been a 30-year bond rally. Well, it may just be ending now.

The big question in China is whether this is true bear market - emerging economies typically see greater volatility - or just another upset of the month. There is also a question now as to how reliant on Federal Reserve financing via QE3 traders worldwide have become. To compare to an individual... if you had a million dollars to invest and then were relatively quickly given access to 10 million, your trading and investing patterns would change fairly dramatically. And they would change again if suddenly you had to revert to, say, only 3 million. We know - high class problems.

Strikingly, many Fed presidents are now walking back the comments by Bernanke last week, even the hawkish members, whether voting or non-voting. The lead dove said volumes today in Switzerland. 

William C. Dudley, president of the New York Fed, who now occupies a permanent seat on the FOMC, said, "The Federal Reserve has fallen short of meeting its employment and inflation objectives. This suggests that with the benefit of hindsight, U.S. monetary policy, though aggressive by historic standards, was not sufficiently accommodative relative to the state of the economy."

Dudley is a guy who ought to know. He lives in the city that's overrun with feral hogs - er, traders.

P.S. - Where's the fiscal policy from the legislative branch and the chief executive?