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Have We Reached "Peak Fedspeak"?
One of the things you may have noticed about last month’s “most important” Fed meeting in recent memory is that the market has completely lost track of the narrative.
Indeed, keeping up with the various competing dynamics that constant central banker meddling has helped to create is nearly impossible and now that the FOMC has admitted that it’s at least partially (and probably wholly) market dependent, the reflexivity problem (or, the “removing of the fourth wall” to quote Deutsche Bank) clouds the picture so much that it’s no longer even clear that there is a correct interpretation.
Of course the FOMC doesn’t do itself any favors when Fed presidents (and most especially Janet Yellen) do so much speaking that you’d think they were on tour promoting a book. Between the convoluted, self-referential reaction function and the cacophony of speakers, the market just simply can’t process it all and with that, we bring you the following from RBS’ Alberto Gallo who asks if perhaps we have reached “peak Fed speak”.
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From RBS
Over the past decades, central bankers have radically changed their approach to communication, as their policy became increasingly active. These have been the key milestones at the Fed:
- 1995: all changes in monetary policy would be announced immediately
- 1999: statement released after every meeting, specifying the fed funds “target”
- 2002: dissenting votes published immediately
- 2003: Forward guidance on policy (“policy accommodation maintained for a considerable period”)
- 2008: Time-contingent forward guidance (“for an extended period” changed to “at least through mid-2013”)
- 2012: Data-contingent forward guidance (“appropriate at least as long as the unemployment rate remains above 6 ½ percent…”)
- 2015: Market-contingent forward guidance? ("an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession”, September 24, 2015)
The Yellen era, so far, has been a mix of time and data-contingent forward guidance, where the Fed has been using both labour market and inflation targets as well as time as goalposts for its policy. But starting with the two taper tantrums and increasingly over the past months, the Fed’s communications have been shifting towards the market, including international developments.
This is, potentially, a sea change. Tying policy communication to market developments (or “international developments”) means tying yourself to market volatility, which intrinsically makes it trickier to implement a stable policy path. The worst-case scenario is a situation like the PBoC, where central banks explicitly decide to target asset prices, and fail. Today, investors are questioning the value of forward guidance and the central bankers’ credibility to commit to their pledges. Have central bankers moved from saying too little to saying too much?
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We'll leave it to readers to answer the last question posed above.
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as it has always been, money talks, bullshit walks.
qe to infinity and beyond, bitchez!!!
I'd like to say it has but I doubt it.
The Federal Reserve has an operating budget of $3.6B annually (courtesy taxpayers, not fiat). That money pays for the 5 star travel speaking circuit and it won't stop. It is critical to use the opportunities to manipulate the markets so all that knew/know what you would say could profit from it. It's in their gene's.
Federal Reserve has only 2 branches on its decision tree for any/every/all decisons.
Will stock market react favorably?
Will stock market react unfavorably?
Whatever Mr Market wants, Mr Market gets
Screw everything else ... even if an ounce of cure TODAY means a pound of pain TOMORROW
We have reached peak lies - which is the same as peak Fedspeak.
Every economic staistic is now a lie in the land of the free. And every statement that Old Yeller makes is a lie. Or any statement that the Nobel Prize Winner makes.
The last time, US media told the truth, it was decades ago.
" Jerry, just remember, it's not peak fedspeak if you believe it".
"Its like asking Bernanke to teach me how to lie, like you"
The Fed has no credibility.
It said it was going to hike rates like 10 times already and it keeps kicking the can.
Its all bullshit.
They know they cant hike rates, the banks know they cant hike rates, the govt doesnt even want them to hike rates, and everyone feels entitled to free money/returns from the stock market.
The rest of the population has an IQ of like 60 so it doesn't even matter what they think or believe anyway, they just play it dumb and hope the welfare check doesn't bounce.
So enjoy the ride, park your money on some shit stock in a corporation that hasnt posted a profit for 10 years and wait for the helicopter money from the Fed , Free Money is Free money, you deserve it just by knowing about it, welcome to the club ^^...
http://memecrunch.com/meme/97YQ5/welcome-to-the-club/image.gif
Would ZIRP (along with rebalancing maturities/rates) help the US by lowering future payments on it's ever increasing debt?
I'd have just a tad more respect for them if they'd just go ahead and dress like circus clowns.
I do miss Trav7777777 and his comments on Peak-this and Peak-that. - Ned
Have We Reached 'Peak Fedspeak'?
That is funny to absolutely hilarious
Let me be clear, there is no Fed equity market put.
William C. Dudley, NY Fed
Yeah, Goldman boy, William C. Dudley, NY Fed is the main string puller.
The FED objective at the moment is to generate enough noise to hopefully mute market sensitivity to whether the rates would be hiked or not, and then to hike them hoping to avoid a major market carnage. The exact same approach they used when tapering QE. One must give them credit as this did work with QE tapering. Or, there is also another option that their objective is to talk about hiking rates just in order to stop the market from advancing into insane territory. Nobody knows the truth but a select few.
Alan Greenspan was The Maestro of Fedspeak. His statements were such convoluted gibberish that the World's economists would spend the next three months trying to decipher what he said. If anyone asked him to elaborate he'd peer at them through his Hubble-glasses as if he thought they were being deliberately obtuse, then "clarify" his prior statement with an even more incomprehensible string of gobbledegook. He had everyone convinced he was a genius. It was like Soapy Smith was in charge of the U.S. Federal Reserve.
After Al Gore invented the Internet and the .com bubble inflated and deflated Greenspan was exposed as a charlatan to most, but his hard core fans remain true believers to this day.
Always hated that motherfucker. A thousand years ago, drawing and quartering would have been too good for him.
I'm just wondering long will the Feds plunge protection team can get away with buying stocks before investors figure out they are artificially propping up the market. These gains in stocks based on bad economic data just proves my point. Who else can reverse +500 points in a few hours?
The Fed already props up the bond market, why not stocks too? What is to stop them from handing billions to their "primary dealers" to buy stocks with?
Audit the Fed immediately !!
Damnit Janet!
https://www.youtube.com/watch?v=ZbpJb7hjb7M
I think so. Only so many times you can cry wolf.
The Fed's "transparency" has jumped the shark.
I liked it when the Fed spoke with one voice, even if you couldn't make much sense of what the hell that voice was saying.
Instead, now we have a cacaphony of Fed presidents and governors, all talking over each other, making contradictory points and raising the question as to whether any of them actually know the Fed's intentions.
As soon as Ms. Yellin has her feet back under her and her head clears, she needs to read the Riot Act to these star-struck cretins and tell them to put a sock in it. Then, if Obama tells her the Fed's still not transparent enough, she should instruct the IRS to audit Michelle's clothing expenses.