While Janet Yellen is hopelessly cornered (as explained yesterday [4], not hiking rates or worse doing even more QE, is the single "biggest risk to global equities" according to BofA as it would not only soak up even more liquidity and crush confidence in the economy, even worse than the Fed did hike rates and unleash the "Ghost of 1937 [5]") when it comes to monetary policy, one place where the Fed's desperate scramble to renormalize is distincly visible is in the FOMC statement itself.
As the chart below shows, after peaking at 895 words in September 2014, just when the Fed announced the end of QE3, the word cound of FOMC statements has tumbled and at 560 words, the April statement was the most "normal" since October 2012 when the Fed was merely doing Operation Twist, and QE3 was still a speculation.
[6]
In the absence of any other guidelines, and it is widely expected that there will be no firm commitments either by the "Dow Data Dependent" Fed about a September or December rate hike, the number of words in the June statement may be the only hint whether the recent trend of renormalization will continue or if something has changed and, with a 700 or even 800 word bombshell statement, easing is here to stay for a long time.
