They say it got up to 77 here today. Felt more like 70. Had to wear my t-shirt at the beach. The air felt cooler than the water. Not many tourists at the beach because it is so cool. I attach some photos.
Stock prices smoothly progressing higher and higher. Traders lost money if they bet on a stock price crash or an increase in volatility. I attach a graph of the CBOE VIX volatility index. I will not be buying calls on that index because I don’t have any way to forecast that volatility will increase any time soon. Likewise I will not buy puts on a stock market index because I don’t have any way to forecast when stock prices may crash. Attached graph looks like a bubble.
Janet Yellen still worries that the economy is too weak so wants to keep interest rates low. They are still talking Keynesian and Monetarist rhetoric that now is decades old — amazing how theories persist so long.
About all the Fed can do is raise or lower interest rates in response to current business conditions. Eventually interest rates will have to rise. At that point bonds will fall as you mentioned in your last mail. Usually stocks will decline too as people quit borrowing to buy new houses, cars, degrees, etc. Business can’t make money if people don’t buy. When that will happen is unclear.