Pity the poor Fed Watcher. There’s hardly anything left to do.
In days gone by, Fed watching was a contact sport. There were cryptic actions by the New York Fed that went by names like “System RP” and “Bill Pass.” These seemed more like football plays than policy actions. Back then, a Fed watcher had to translate the arcane actions into meaningful intentions. It took training in economics, finance, and communications.
In 1994 the Fed initiated a new policy of announcing Fed decisions. But Greenspan enhanced this with his policy of “constructive ambiguity.” Now you needed a degree in Russian Literature to decode his pronouncements.
With Bernanke, there really doesn’t seem to be anything to do. Not only is he clear in what he says, he’s put Fed policy on perma-hold. The Fed watchers are endangered again.
So don’t worry if they squawk about rising rates. Most likely, they’re just getting bored.
Douglas R. Tengdin, CFA
Chief Investment Officer
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