Another day, another speech. This time from Chairman Yellen who now says that inflation readings are transitory and the Fed has more scope for further accommodative actions. In other words : MORE STIMULUS as their outlook is looking wrong again. So, if at first (or second, third etc) you don’t succeed, try try again.

Whether or not markets continue to hold on to the notion that a carrot dangle will magically propel the economy is uncertain, but what other choices are there?

GDP revisions, employment report on the horizon and plenty of news you need to know…. All packed into this episode.

Click HERE for Show Notes and Links

Markets have been trading sideways – up to resistance and then slowly stagnating. Volume has been anemic. Monday volume lowest of the year. Then….

Yellen speaking today in NY – dovish as can be… Here are a few of the highlights

* Importantly, this forecast is not a plan set in stone that will be carried out regardless of economic developments. Instead, monetary policy will, as always, respond to the economy’s twists and turns so as to promote, as best as we can in an uncertain economic environment, the employment and inflation goals assigned to us by the Congress.

* Looking forward however, we have to take into account the potential fallout from recent global economic and financial developments, which have been marked by bouts of turbulence since the turn of the year.

* The Committee continues to expect moderate economic growth over the medium term accompanied by further labor market improvement.

* There is a consensus that China’s economy will slow in the coming years…

* The inflation outlook has also become somewhat more uncertain since the turn of the year, in part for reasons related to risks to the outlook for economic growth.

* Given the risks to the outlook, I consider it appropriate for the Committee to proceed cautiously in adjusting policy. This caution is especially warranted because, with the federal funds rate so low, the FOMC’s ability to use conventional monetary policy to respond to economic disturbances is asymmetric. If economic conditions were to strengthen considerably more than currently expected, the FOMC could readily raise its target range for the federal funds rate to stabilize the economy. By contrast, if the expansion was to falter or if inflation was to remain stubbornly low, the FOMC would be able to provide only a modest degree of additional stimulus by cutting the federal funds rate back to near zero.

Naturally, post comments markets shot higher – except banks

Bank Stocks

What the Yellen commentary is saying is that there is a lot more to fear about the global economy than we think… Her speech had plenty to say about it and it is not usual that the Fed discusses things so overtly if they are not big issues.

Another example: Japan’s industrial production dropped the most since 2011 in February, as falling exports sapped demand and a steel-mill explosion halted domestic car production at Toyota Motor Corp. Output slumped 6.2 percent after rising 3.7 percent in January, the trade ministry said on Wednesday. Economists surveyed by Bloomberg had forecast a 5.9 percent drop.

Small business hiring hot spots. See chart below…