Yellen Comments Point to Instability



Anyone who has been involved in the world of finance or the economy for an extended period of time knows the damage that the financial crisis of 2008-2009 had. And people involved in finance of any sort, be it trading, investing, or passively trying to grow your retirement fund, can still feel the scars that the crisis created. There is still an undercurrent of fear coursing through the world’s economy today, several years later. Yes, indices around the world (and especially in the United States) have seen all-time highs in the years since then, but there is still volatility and there is still a lot of uncertainty, especially amongst institutional investors and major players within the economy. It’s made growth difficult, and when it does occur, it’s always looked at with a suspicious eye.

In recent comments, the Chairperson of the Federal Reserve—Janet Yellen—indicated that the only real way to heal from the damage done by the financial crisis is to run what she described as a “high-pressure economy.” Comments like this, no matter how well intentioned, always spark fear in traders, especially after all of the trauma that the economy has seen in the last decade or so. Her talk was part of a very broad look at how the economy has progressed since the crisis began, and many critics believe that she was far more pessimistic in her view than what was expected.

Undoubtedly, the kneejerk reaction to something like this will be to see assets drop in price. This is what we have observed already when it comes to the U.S. stock market. Many stocks dropped in price immediately after these comments, although all three of the major U.S. indices ended up for the day on the day that Yellen spoke. However, the gains that were experienced were minimal at best. The S&P 500 improved on Friday, October 14th, by only 0.02 percent. The Dow Jones Industrial Average was the biggest gainer of the three, improving by 0.22 percent. Sideways movement like this made the day a very difficult one for binary options traders, especially as many assets were oscillating rapidly in the latter half of the trading day, making it very difficult to accurately predict where prices would go to next. In fact, binary traders found much better choices in other marketplaces. The Euro STOXX 50 index rose by 1.69 percent on the same day. The CAC 40, France’s major stock index, jumped up by 1.49 percent, ending the week with a big rebound upward.

Are there issues to work out when it comes to international stock prices? Of course. Will the Fed’s strict regulation of monetary policy, keeping a tight watch on the labor market and inflation, help worldwide stocks find greater stability? Maybe. The most important thing to remember for us is that we just need to keep an eye on conditions. We can’t do a thing to help influence policy, but we can watch trends and find strong positions to help our own money grow. That’s one of the big strengths that comes along with trading in the binary market. We have the ability to profit off of assets regardless of which direction they might be going. While conditions might be volatile, this can be a bit tougher to accomplish—like what we are seeing right now—but it is still quite possible. Having a strong ability to analyze assets of all sorts, and finding the biggest and most predictable movers at any given time, will improve your profits as a trader and make it easier to earn more regardless of the conditions that the economy might face.