The markets are an incredible aggregator of information. However, because of a tsunami of information, sometimes investors have difficulty in distinguishing the signal from noise. 

Let us try to help. Here we look at three cases in which it seems many investors maybe confusing the noise for the signal. 

First, the Chicago Federal Reserve President Evans, a voting member this year of the FOMC, spoke yesterday. Evans is often placed on the dovish side of the Fed. While recognizing signs of strong growth in the US, he urged patience on raising rates.  He warned that the Fed's inflation target might not be reached until 2018.

Evans indicated he was one of the two Fed officials who does not expect the Fed to raise rates this year, according to the last month's dot-plot. He went further, claiming that it would be a “catastrophe” to raise rates.   

This is not the signal for investors. The clearest signal came from the FOMC statement and Yellen's press conference. The signal was not totally obscured by in the minutes that were published yesterday. That signal is that provided that the labor market continues to improve that a rater hike near the middle of the year remains the most likely scenario, even if price pressures are not closer to the Fed's target. We note that the last tightening cycle began with the core PCE deflator near current levels. There was not a formal target at the time, but it is still an instructive example. 

No one at the Federal Reserve, including to two hawkish dissents from the December meeting, favors an immediate hike.  The Fed is showing patience. It is also showing patience in the sense that it will its balance sheet remains at historic levels. The Fed argues that the accommodation of its asset purchases, which it never called QE, lies with the stock of holdings, not the incremental flow (purchases). That it will likely raise rates before it reduces the size of its balance sheet is also a sign of the Fed's patience.