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If You Missed It, You’re Lucky

For those who faithfully ignore all things market related, yesterday was just another day. But for the rest of us it was the day the Federal Reserve Board and its Chairwoman Janet Yellen gave the capital markets the news they’ve been waiting for, namely will they or won’t they raise interest rates. Make more sense? I don’t think so, but I do think the faithfully who ignore all things market related got it right. Without going through my over generous arguments over the value of too much information the idea that the Fed meeting yesterday should’ve garnered so much attention as to merit even a comment from the president didn’t protect the outcome of an informed investor, but an investor frustrated by the gargantuan speculators banking on a negative comment going viral.

Whats my point? In over thirty years of being a Fed watcher, necessary to many aspects of my business, I have never known such public concern over a Fed decision as whipped up by the media. Look, I’m not suggesting that caution should be absent, after all if you hold an umbrella every day (and I do) sooner or later it’s going to rain. I’m merely curious why when good things happen in the world it is reported with far less enthusiasm? The few among the various Federal Reserve Banks around the country that recognized the mixed signals that are coming off indicators that broadly measure economic growth and inflation would’ve strongly recommend the Fed to  hold off on any action. But those who espoused direct action, given the nickname “hawks” get much more traction with their message.

In the meantime, they were wrong and the Federal Reserve Board did NOTHING yesterday.

That said, I’m focused on managing accounts to the economy, not just the Fed. These days the preparation for any kind of Fed action compelled me to slightly increase the allocation to fixed income, primarily because of the aforementioned mixed economic signals. And while there are many issues still brewing in the world, and I certainly don’t have to repeat them, the markets are going to continue their corrective behavior. All delivered with the civility of an interruption until there are indications that economic activity is re-accelerating. That’s what I’ll be looking for and in my opinion so should the Fed.

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