Robert Shiller Says Markets Overreacted To Fed’s Powell

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Robert Shiller Says Markets Overreacted To Fed’s Powell

Yale University Professor Robert Shiller discusses Jay Powell and the Federal Reserve on “Bloomberg Daybreak: Americas.” (Source: Bloomberg)

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Yale’s Shiller Says Markets Overreacted To Fed’s Powell

[REITs]

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Transcript

Professor surely you were there in Atlanta as I understand it. What did you make of what Jay Powell said. Was it about face more or less about the extent to which the Fed would listen to the markets.

The scuttlebutt that I encountered at the meetings was the markets really reacted to something we just said.

Of course it is always a surprise when that happens. I think that’s how it is among the most carefully chosen word first that I know very reasonable man. And the idea that that would swing markets is a sign of over excitement of some sort. He was he just said the most eminently reasonable thing that we are going to wait and see and we’ll adjust the recent adjustments they’ve made were small and in line with expectations. There’s nothing there. I think that what’s driving the market is a more broad long term narrative that is not captivated by anything that Powell has said.

But Professor Shiller was one part of what he said which was different from what you just said a month before and that had to do the so-called autopilot on the rolling off the balance sheet as it were the size of the money supply the liquidity the marketplace. Wasn’t that a change when he said you know what we will take a look at that as well. Doesn’t sound like we’re on autopilot anymore.

Well I don’t know we’re getting into subtleties that are beyond me. I think that going back to Janet Yellen there was always this reasonable statement that we will adjust as things change. So exact wording is not my department but I think that there is a there is a general sense of crisis developing and that is what’s on people’s mind it’s making them remember things like the financial crisis of almost 10 years ago.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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