Following his press conference on Wednesday afternoon, Jerome Powell caught some criticism from the peanut gallery for “stoking” risk sentiment that scarcely needed additional encouragement.

US equities scaled new highs as Powell spoke, prompting predictable catcalls which’ll surely proliferate over the remainder of the week, particularly if asset prices build on gains.

Although I quickly (and aptly) described the Fed’s March communications as “convoluted,” it’d be disingenuous of me not to mention my own exhortation to the Fed ahead of this week’s policy gathering. The following passages are from the Weekly:

Whatever the Fed does or doesn’t do with the dot plot, the SEP and their policy communications in March, they should do it (or not) based on an assessment of the actual data they have, while being attentive to the very real risk that the macro landscape could look entirely different by the next SEP meeting in June. That’s the best they can do.

Although I’m sympathetic to the idea that a sufficiently vigilant, “bad cop” Fed committed to everywhere and always guarding against booms and busts could, with a little luck and courage, prevent speculative bubbles by engaging in the real-time management of financial asset prices, I think an honest assessment entails conceding that in practice, such a Fed would do more harm than good.

The criticism of Powell on Wednesday revolved in part around his alleged “failure” to engage when asked, by Axios, whether the easing across various measures of financial conditions since late-October is something the Fed’s concerned about.

Unspoken (by critics) is the notion that the Fed should be in the business of talking stocks lower when “necessary” in the service of curbing undue speculation or, in this case, guarding against gains which could, through the vaunted “wealth effect,” support spending and thereby inflation. The Fed regularly talks stocks up, so why not down too?

But accusing Powell of talking stocks up on Wednesday is to forget that equities tend to hear what they want to hear. Powell didn’t say the Fed wasn’t concerned about the prospective read-through of easier financial conditions. He just didn’t indicate any appetite at the Fed for targeting market-based measures of financial conditions in the absence of evidence to suggest there’s some utility in doing so currently. So, the Fed doesn’t want to talk stocks lower, let alone encourage wider credit spreads, just for the hell of it — that is, without cause. The same’s true of the labor market. Will the Fed sacrifice jobs to get inflation down from 9%? Yes. From 2.6%? Maybe not so much. That may be carte blanche for markets to “carry on,” so to speak, but I’m not sure it counts as a Jim Cramer “Buy, buy, buy!”

Relatedly, Powell didn’t say, in response to Steve Liesman, that the Fed’s prepared to tolerate above-target inflation in perpetuity. In fact, he said “no” to that question. The problem was the emphasis he placed on “over time.” The Fed’s committed to getting inflation sustainably back to target over time. On some interpretations, that was a tacit admission that whatever the Fed intends over the longer run, the inflation target’s higher in the near- to medium-term.

But if you’re not looking for a dovish message (i.e., searching for an excuse to bid up risk assets) you might simply call Powell’s answer another way of saying what he’s said dozens of times before: Namely, that the Fed isn’t going to wait on 2% inflation to cut rates. They’re just waiting for convincing evidence that inflation’s on its way to 2% sustainably. If you are looking for a dovish message, though, you might’ve heard exactly what you were hoping to hear — namely, that this is a Fed done raising rates regardless of inflation outcomes.

It’s true that Powell was unequivocal on Wednesday that terminal was reached in July. But implicit is the assumption that inflation doesn’t take back off. Plainly, if CPI re-accelerated to, say, 5%, more rate hikes would be on the table. Powell didn’t say that because he didn’t feel like he needed to. It should go without saying.

Note also that the message from the dots was that rates are likely to be higher going forward. Not higher versus current levels, obviously. Higher versus the December SEP-implied policy path. Indeed, the only median dot that didn’t shift up was 2024’s. Of course, that’s the dot markets cared about, and who can blame them? Nobody knows where rates are going to be next year, let alone the year after that, so the signal’s in the current-year dot. And the signal was “buy.” Or at least that’s how markets perceived it.

Could Powell compel markets to see things differently, where that means convey an inclination at the Fed to lean against risk assets? Sure. And he did that at Jackson Hole in 2022. But this isn’t summer of 2022. It’s not immediately obvious what the Fed stands to gain from engineering, say, a 15% stock correction. Can anyone assert, with anything approaching confidence, that SPX 4750 next month is more conducive to sub-0.2% MoM core inflation prints four months from now versus SPX 5250? What’s the math on that? How do you model that reliably, and even if you can, what’s the right amount of “bad cop” to get that outcome without risking SPX 3750?

Finally, we shouldn’t forget that the whole point is to engineer a soft landing, where that means removing restriction gradually, but still preemptively, in order to facilitate a benign slowdown and, ultimately, a coast to trend growth. Is it risky to cut preemptively? Well, yes. Which is why the Fed’s trying to be careful about it. But even if you’re like me and think real neutral’s a lot closer to what’s implied by the highest long run dot than the lowest, you have to recognize the distinct possibility that any reaction to one or two monthly CPI reports constitutes an overreaction.

There are two ways the Fed can snatch defeat from the jaws of victory at this juncture. One is to cut too much, too fast at the risk of a serious inflation re-acceleration. The other is to overstay at terminal because you’re terrified of a 1970s analogue that may not even be applicable, at the risk of a sudden slowdown. It may not seem like it on some days or during some months, but the latter’s far more likely than the former.

Oh, and finally: Everything’s not about the damn election.