Yesterday, Federal Reserve Chairman Janet Yellen spoke at the Economic Club of New York and left monetary markets without direction, and investors rushing into safe havens outside the dollar. In fact, while the Fed Head spoke contradictory words that the economy is both strong, and also uncertain in nearly the same sentence, the dollar reacted by selling off against most currencies, and gold rose more than $20 by the close of trading.
Perhaps the telling point for Yellen was the fact that on Monday, the Atlanta Fed downgraded its Q1 GDP estimate to below 1%, showing that December's rate hike was a huge mistake in an environment of continuing deflationary recessions.
"the Atlanta Fed will have no choice but to revise its Q1 “nowcast” to 1.0% or even lower,which would make the first quarter the lowest quarter since the “polar vortex” impacted Q1 of 2015, and the third worst GDP quarter since Q4 2012. It means one-third of already low Q1 GDP growth has just been wiped away.”
Moments ago the Atlanta Fed which models concurrent GDP, slashed its Q1 GDP from 1.4% (and 1.9% last week) to a number not even we expected: a paltry 0.6%, which would match the “polar vortexed” GDP print from Q1 2015.
Should the number drop even more, will be the lowest since Q1 of 2014 when the US economy suffered its most recent contraction of nearly -1%. – Zerohedge