How ever-loving stupid do they think we really are?
Goldman's plenipotentiary at the New York Fed, William Dudley or B-Dud, has been running around pointedly emitting a new word signal called “patient” rather than “considerable time” to describe the Fed's interest raising plan. Then right on cue, his alter ego back at Goldman central, Herr Hatzius, yesterday dug out and circulated to the clientele an identical 10-year ago audible from when the Fed last changed its password in 2004:
In the 2003-2004 playbook, “considerable period” gave way to “patient” as a signal that the hikes were drawing closer, and it is interesting that the words “patient” or “patience” have shown up quite frequently in recent Fed speeches.
Finally, like clockwork at 6:30 PM last night, the Fed's official out-sourced spokesman, Jon Hilsenramp, delivered the definitive message to the casino players through Rupert Murdoch's drop box.
Federal Reserve officials are seriously considering an important shift in tone at their policy meeting next week: dropping an assurance that short-term interest rates will stay near zero for a “considerable time”…….
Mr.. Dudley—a part of Ms. Yellen's inner circle of advisers—has suggested recently that the Fed could replace the assurance of low rates for a considerable time by stating more vaguely that it expects to be patient before moving……. The Fed took this approach the last time it was trying to engineer a liftoff from low rates, in 2004….(when it)dropped an assurance rates would stay low for a “considerable period” and said it would be patient before raising rates.
Yes, as its struggles to screw up the courage to allow money market rates off the zero bound some time vaguely next year, the Fed will give fair warning by featuring the letter “P” in its December post-meeting statement. It's double secret password, in fact, will now be “patient”, meaning that the rounding error cost of carry for speculators may rise microscopically— to say 25bps six months down the road. No sooner.
Do I mock these clowns and juvenile delinquents? Yes, I do.
The inconsistencies and stupidities are mind-boggling. Right now the market is trading its the highest Q ratio in 100 years other than a brief few months at the peak of the dotcom madness. Yet according to one of the Fed's always quotable empty suits, Dennis Lockhart of Atlanta, it may be too early to change the password at the December meeting. Lockhart recently told reporters at an event Monday that,
…..he was “not in a rush to drop” the “considerable time” phrase. He wants to bemore certain the economy is strong enough to bear rate increases before moving.
What? Under the six month rule, the first smidgeon of a rate increase would be July 2015. That's exactly 78 months after the Fed first body-slammed the policy rate down to the zero bound. Too soon? C'mon.
According to another department of Goldman Inc., the S&P 500 will be approaching 2350 shortly thereafter. Does the regime really mean to say that even though the stock market will have catapulted 4X during that endless era of ZIRP—– the economy is still too weak to bear a 25 bps blip on the short rate?
