When Yapping No Longer Works

Markets briefly rallied on a CNBC interview with NY Fed president John Williams. It didn't last long.

Message of the Day

New York Fed President John Williams Says the "Central Bank is Listening to the Market", and everyone else too.

“We are listening very carefully to what’s happening in markets for two reasons. One is financial conditions have [an] important influence on [the] economic outlook,” Williams said on “Squawk on the Street ” in an interview with CNBC’s Steve Liesman. “Second, I think we are hearing something important from markets, and that is a concern risk to the economy and potential further slowdown than we currently expect in our base case.”

It’s not just looking at the “hard GDP data” or “CPI data,” he added. “We’re listening to the message of the market.”

He said Friday that this week’s rate increase was “fully justified and makes sense,” but he added the Fed is open to reconsidering its views on rate hikes next year. Stocks rose sharply during Friday’s interview, but then faded.

Implied Message

The implied message was that the Fed would not let the stock market decline, or if it did, the Fed would adjust policy.

Fed Listening

The Fed is listening, to everything. What a hoot. The market does not believe the Fed's implied message and neither do I.

This is another one of those "Too Late To Matter" concepts: Too Late To Matter: Fed-Sponsored Economic Bust Coming No Matter What.

Mike "Mish" Shedlock

Comments (12)
No. 1-5
Blacklisted
Blacklisted

Raising rates is ALL about saving pensions (or delaying the inevitable), period! This of course is going to blow up the balance sheets of the foreign entities holding mountains of dollar-based debts! The mere fact NO ONE in the MSM brings up the pension problem, tells you all you need to know.

KidHorn
KidHorn

I have money in the stock market and have lost some the past few weeks, but I'm all in favor of raising rates. Any part of the economy that can't handle interest rates of say 5%, is trash and needs to go away. Get rid of the cancer and let some real organic growth commence.

shamrock
shamrock

s&p trailing p/e is now down to about 18.

AWC
AWC

Yap is cheap. But if it gets bad enough the Fed will buy equities and securities directly. They own it now. The Fed Put isn't dead, it's only regrouping.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

"s&p trailing p/e is now down to about 18" Smoothed PE is 26.75