What did Janet Yellen say to confuse investors?

By:
on Mar 24, 2023
Updated: Apr 18, 2023
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  • Janet Yellen recently made remarks that contradicted Fed Chair Powell.
  • LPL Financial's Quincy Krosby expects a near-term bounce in U.S. stocks.
  • The benchmark S&P 500 index has lost nearly 2.0% in about 48 hours.

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Following a 25 basis points increase in interest rates this week, Fed Chair Jerome Powell assured in his press conference that “all depositor savings” in the United States are safe.

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Was Powell behind the recent sell off in stocks?

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That came as bit of a relief for markets after the recent bank failures. Powell’s remarks were also in line with what Treasury Secretary Janet Yellen told the American Banker’s Association just a day earlier.

But then she entirely went another way as she testified before Congress on Wednesday. According to Quincy Krosby – Chief Global Strategist at LPL Financial:

She did a complete 180, suggesting not all depositors would be made whole in the event of a run. Last thing markets need now is confusion and reneging from its top government officials, but that’s exactly what happened.

Krosby sees a near-term bounce in U.S. stocks

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Contradiction between Powell’s and Yellen’s remarks and the associated confusion has pushed the S&P 500 down nearly 2.0% versus its high on Wednesday.

On the plus side, though, Krosby says a relief rally may be coming. Explaining why, she wrote:

Algorithms move instantly and the response was immediate. Markets are in oversold territory today and due for a possible bounce, and that may provide relief from a sell-off wrought by careless words from a top official.

Earlier this week, LPL’s technical strategist Adam Turnquist had laid out reasons to remain bullish on U.S. stocks as well (read more). Versus its year-to-date high, the equities market is down over 5.0% at writing.

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