As Chair of the Fed, Ben Bernanke promised to run a transparent organization and that he would be more forthcoming than his predecessor, Alan Greenspan. In keeping with that promise, Bernanke began holding press conferences after most regularly scheduled Federal Open Market Committee meetings to discuss their decisions and their forecast. Most market watchers cheered this practice because it gave investors a glimpse into the decision-making of the deliberative group.
This brings to mind the old adage: “Be careful what you wish for.”
Chair Yellen has continued holding press conferences, and we do get a glimpse behind the curtain of the wizard. Just like Dorothy in The Wizard of Oz, all we find there are hapless humans who remain flawed and lacking any visibility on what will happen next. The Fed’s press release last week, as well as Yellen’s comments, noted that rates wouldn’t go up in April. After that anything is possible depending on, well, whatever happens between now and then. If that seems vague, that’s because it is.
This leaves the markets reacting to every economic indicator, and brings back the bad old days of when bad news was good because it could foreshadow lower rates for longer, and good news is bad because it might mean the Fed will raise rates sooner and/or higher. Brilliant.
Michael Canet is a Registered Representative with TCM Securities, Inc. and can offer securities through TCM Securities, Inc., Member FINRA/SIPC.
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