The Fed says virtually nothing and the market reacts to what they think it said. "Monetary policy accommodation." "How economic and financial forces will evolve." "Ensure Maximum sustainable economic growth." Blah, blah, blah.
And these guys get paid to say this stuff. Just need to know the vocabulary and string a few good phrases together. They've got to be laughing when they get together. "What'll we say this time?" Too bad they carry the weight they do.
You are very superficial and flaunting an over-blown ego which is surely you misunderstanding of HOW the Fed. thinks and reacts. You can not seperate the wheat from the chaff obviously.
Case in point.---I read between the line of Geenspeak. I try to understand jawboning from what can REALLY BE DONE by the Fed. in global economy---dreedva-GLOBAL is the operative word in the complex world economy. When you understand the calculus and arithmatic of the movements of money surely you will have mastered the understanding of "so many moving parts working together."
BTW--I made a mint by buying the last 308,000 jobs increase. Fixed income especially emerging market debt dropped 25%. Ole Mo moved in swiftly.--WHY?? Because this time he saw "all the moving parts."---Not to be nasty, but I just can't let flippiant comments go unchallenged.---MO, Carry On
I appreciate your comments and your defense of the FED. I acknowledge the flippant, even the superficial accusations. I sorta laugh at the over-blown ego thing, but what the heck.
Yes, I actually do understand the importance of the Fed's comments and reports. And the impact they have on the markets.
The point I was trying to make is that any thinking man/woman who just steps back a little at looks at the complex world and those who are trying to manipulate it�some quite successfully�cannot help but laugh. Geez!
Years ago Horace Wallpole said:
The world's a comedy to those who think, A tragedy to those who feel.
It�s fun to listen to the Fed. They use words that can�t offend the congress and that please the administration.
If the Fed members aren�t laughing a little when they�re staffing their releases to the public and to Congress, I find that disheartening. Finding the right words that say almost nothing, but have coded messages for those so seeking has to be a blast. If they aren�t having fun with that, they don�t know how to have fun. I�m not saying their words aren�t important�look at �irrational exhuberance��just that their decisions and actions shape market events only in the very short term. Batting a lifetime .333 will get you in the HOF if you�re a baseball player. Batting .333 at the Fed leads to bubbles and recessions. And, I contend they�re not doing much better than that.
I wouldn't be too distracted by this apparent minute scrutiny of each and every pearl of wisdom that falls from the Chairman's lips. As James Schmidt pointed out in his BTO audio, everybody knew that rates were going up to some degree.
Since the Summer of 2003, the problem hasn't been what G said or didn't say or any one economic number. It's been the staggering leverage applied by various institutions to the underlying wide spreads between the short and long ends of the rate curve. They know what they stand to lose on these vulnerable positions and know that a particular economic number or, worse, a particular remark aren't things can be anticipated.
The 2003 selloff in Federal paper was a classic instance: they began to sell in the midst of a real barrage of good tidings about the debt markets. We were in the grip of "deflation." Rates were going to zero. The Fed was going to start buying in notes and bonds. They simply couldn't afford to be wrong, you see, and had to take advantage of whatever silliness gave at least a little depth to the very lopsided Treasury markets.
So, I'd expect these "over-reactions" to continue until the leverage is taken down to a more manageable level. And I'd expect the media to continue pointing to the "news" and suppositions about same after the fact.
IMO, you've got to regard every even slightly overbought condition in high grade debt as another potential intermediate top, lower than the last. The only way you're going to know these guys are done selling is when the previous top is strongly exceeded on a relief rally.
It's a very technical market that could go on for a while.
The leverage opportunity for the carry trade is, of course, one of the big problems the Fed created for itself when it crushed the economy in '99-'00 and had to find super strong medicine to undo it. What a shame. If they had left the business cycle alone, Fed Funds could have naturally worked their way down from 4.75% beginning of '99 to a 3% level now without bursting or creating any bubbles.