Fed Governor Janet Yellen gave a speech tonight, and it’s widely interpreted as being pretty dovish.
Futures are up again on the news, as it’s being taken as an endorsement of more QE.
Remember, a big factor in today’s rally was yesteday’s reprot by Jon Hilsenrath in the Wall Street Journal suggeting that QE was now on the table.
… risk management considerations arising from today’s unusual circumstances strengthen the case for additional accommodation beyond that called for by simple policy rules and optimal control under the modal outlook. In particular, as I have noted, there are a number of significant downside risks to the economic outlook, and hence it may well be appropriate to insure against adverse shocks that could push the economy into territory where a self-reinforcing downward spiral of economic weakness would be difficult to arrest.
In addition to Yellen, Bernanke speaks tomorrow, so the Fed is really getting an opportunity to limber up and make the case for more easing.
From here slide deck, here are the four things that could still slam the economy.
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