FWIW – This feels like a much better proxy for overall American mood than the nominal indices. pic.twitter.com/ZEFi1AzvDB
— Peter Atwater (@Peter_Atwater) January 4, 2019
S&P liquidity has been trash all year pic.twitter.com/dXtH4PHNZQ
— THE LONG VIEW ⚫️ (@HayekAndKeynes) January 3, 2019
introducing the BAARFF+ Index (buybacks, airlines, autos, retail, financials, FANG+)
— Eric Pomboy (@epomboy) January 3, 2019
Yellen: "Corporate indebtedness is now quite high… danger that if there’s something else that causes a downturn…high levels of corporate leverage could prolong the downturn and lead to lots of bankruptcies in the non-financial corporate sector" 3 of 3 t.co/9jL01wTImT
— David Wessel (@davidmwessel) January 3, 2019
The Fed has the authority to require banks to add to their capital temporarily if it sees a risk that excess credit growth threatens financial stability. This Countercyclical Capital Buffer (CCyB) is now zero. Do you think it should be raised?
Yellen: I would urge the Federal Reserve Board to carefully consider raising the CCyB at this time. Some key financial indicators, such as the ratio of credit to GDP, do not currently signal growing financial stability risk; and the Board’s recent Financial Stability Report assessed vulnerabilities overall as moderate. But I am concerned that asset valuations, including in sectors such as commercial real estate, are elevated and I see dangers relating to the large volume leveraged lending where there’s been a significant weakening of underwriting standards. The high debt burdens of riskier nonfinancial corporations could deepen the next downturn and impose losses on the banking system that would intensify a downturn by restricting the supply of credit. Raising the countercyclical capital buffer now would improve the resilience of the banking system, enabling it to better weather a future downturn. Extra capital can be released when stresses in the economy and the banking system emerge.