Are the potential nominees that different?

The media seems to think that if Yellen is re-nominated as Fed Chair, stocks will skyrocket … but there’s probably not as much difference between potential Chairs as we think.

During a speech last week, Yellen acknowledged that even a little downturn, which would necessitate a few percentage points of easing under “normal” circumstances, could require additional use of “unconventional” monetary policy.  Obviously, this is true … if your main weapon is to lower rates, and rates are near zero, you have to find another weapon.

Changing Return/Risk

According to EurekaHedge, Hedge Fund launches are down 30% from the 2015-2016 average.  Nobody should be surprised by this … with Central Banks buying every AAA security they can get their hands on (less $50m per month in the US), investing gets pushed out the risk curve.  Pensions/401k providers can’t meet obligations with treasuries, so they move to muni bonds, and then to corporate bonds, and then to equities, and then to alternatives.  The greater the manager’s mandate for risk, the the more quickly he or she moves out that curve.