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Reflexivity And Risky Ventures
Market participants don't fully appreciate the Fed's reflexivity "problem."
I put problem in scare quotes because it's only an annoyance for the Fed if they too don't fully appreciate it, and by now I think they mostly get the joke. And also that it -- the joke -- is on them.
Plainly, Nick Timiraos wasn't just musing idly when he suggested, on Thursday afternoon, that market pricing for next week's FOMC meeting had by then gone too far in fading a possible 50bps first cut. Neither was it a coi
I agree, I also think FOMC wants to stay out of the political fray. Not so much that they will hesitate to do their jobs, which they take seriously, but if there’s a way to do it w/ less controversy, why not chose discretion over valor?
How about a steady 25 points (Sept, October, November, December). I could care less whether they meet in Oct or not. That would give us 100 point by the end of the year.
The 50 response could be ebullient, and, as H pointed out, “what do they know we don’t”
Your response seems to be a contradiction to me. “Ebullient” implies to me that the market would rally because rates are going down, while “what do they know we don’t” implies that there is a serious problem (looming) and maybe it would be a good idea to sell. If the later is true, then we may see an “ebullient” (lively) move to the downside in stocks. What am I missing?
If the FED wants to surprise the market, how about 75 or even 100 in Sept and just get ahead of the curve.