Has the Fed finally painted themselves into a corner? This question has been asked many times over the past several years. However, a growing number of respected economists are now suggesting that perhaps this scenario is playing out like a bad play. The Fed believes they are on a path of normalizing interest rates but fail to understand that their hands are tied. Chair Yellen testified before Congress last week, and while she did not take additional rate hikes off the table, she did not say otherwise. She noted that inflation will rise back towards 2% over the medium term, that employment will continue to improve, and the prospects for flopping back into recession are remote. She did acknowledge that there are concerns in regards to China, depressed commodity prices, and a sluggish manufacturing sector. The big question raised during her testimony was the possibility that the Fed might consider implementing negative interest rates if the economy falters. As a result of this thought becoming a reality, bond yields plunged. The 10 year UST note fell over 14 bps intraday last Thursday before a little normalcy returned by Friday and the yield at week’s end was 1.74%. Make no mistake: THE U.S. WILL NOT EMPLOY A NEGATIVE INTEREST RATE STRATEGY NOW OR EVER! The consequences would be a disaster. The good news for the markets was a better-than-expected increase in retail sales for January (up from -1% in December to +.2%). Nothing to write home about but excluding autos, gasoline, and building materials, we were up a solid .6%. Crude oil prices soared 12% last Friday, which was the biggest 1 day gain since 2009. The stock market rebounded as well (Dow +313 points) but still remains down 1451 points for the year. The financial markets will hopefully have a calm holiday shortened week in celebration of Presidents’ Day.