Apparently what the Fed thought was sufficiently well "telegraphed" to the market, was "telegraphed" only to Goldman, and maybe a few others. Here is how the Fed is now doing some serious late day damage control before Asia opens, with backtracking courtesy of Fed Board member Elizabeth Duke.
- DUKE: DON'T EXPECT THURS DECISN TO LEAD TO TIGHTER FIN CONDTNS
- DUKE: DISC WINDOW CHANGES ONLY A REVERSAL OF SPREAD REDUCTN
- DUKE: EXPECT BNKS TO USE PRIV SOURCES FOR NORML FUNDNG
- DUKE: CONTINUE TO EXPECT NO LOSS ON CREDIT TO BEAR STEARNS, AIG
- DUKE: IF HAD TO REDO, WOULD VOTE AGAIN TO MAKE LOAN TO AIG
- DUKE: PLEASED TALF WORKED, MORE PLEASED 'BECOMING UNNECESSARY'
- DUKE: ECON BY NO MEANS NEARLY AS STRONG 'AS WE'D LIKE'
- DUKE: EXPECT BNKS TO ONLY USE PRIM CRED AS BACKUP FUNDS SOURCE
- DUKE: DISC WINDOW MOVES DON'T SIGNAL MON POL OUTLOOK CHANGE
- DUKE: FED RETURNING TO NORMAL DISCOUNT OPERATIONS
- DUKE: THURS DECISN FURTHER NORMALIZN OF FED LENDING FACILITIES
What is most amazing, is that the truth bid-to-cover on her 11 statements is at most 10%.
Update: here are some musings from Dennis Lockhart on the topic of how one can have their cake and eat it too:
LOCKHART: MON POL REMAINS ACCOMMODATVE;NEEDED FOR RECOV
LOCKHART: DISC RATE HIKE NOT MEAN TIGHTENING IMMINENT
LOCKHART: STRONG Q4 GDP PERFORMANCE PROBABLY NOT SUSTAINABLE
LOCKHART: UNCERTAINTY MEANS NO IMPROVEMENT EXPECTD IN CAP SPEND
LOCKHART: COMM R-ESTATE,DEFICIT POSE UNCERTAINTIES FOR BIZ INV
LOCKHART: AT UNCERTAIN JUNCTURE; MUST WATCH INDICATRS GOING FWD
LOCKHART: HSG SECTOR IN MIXED STATE; SOME ENCOURAGING NEWS
LOCKHART: DON'T EXPECT MUCH INVENTORY EFFECT IN 2010 GDP GRWTH
LOCKHART: PREDICTS 'VERY SLOW RECOVERY' IN UNEMP MARKET
LOCKHART: FORECASTING LOWER GROWTH, MORE GRADUAL RECOVERY
LOCKHART: U.S RECOV IN 'TRANSITIONAL PHASE';POSITVE SIGNS
LOCKHART: FED FACILITIES WIND-DOWN SHOW FIN SYS STRESS ABATED
LOCKHART: THURSDAY FED ACTION REMOVAL OF FINCL CRISIS FACILITY
LOCKHART: CONFIDENT FED HAS NECESSARY TOOLS, CAPACITY TO ACT
LOCKHART: MON POL IN THE COMING YEAR 'MUST BE NIMBLE'