Citadel’s main man Ken Griffith has openly scolded Fed officials, saying that his advice to chairman Powell would be to “say less“. As I’ve been tangentially alluding to before, FOMC members would in the past have the strong inclination to only pass on their thoughts on monetary policy around press conferences past FOMC meetings.
Nowadays, they behave more like celebrities, being invited as speakers, interviewed at various events and forums, begged for their opinion and projections. It is a fact that monetary policy is one of the main drivers of the stock markets in the long term, and single ideas spoken by the various reserve bank president have moved the markets in the last year on various occasions.
I agree with Griffith, the Fed should do their work but only discuss it on an appropriate platform, i.e. the FOMC press conferences. A large part of the excessive duration of the January/February relief bounce, next to historically high levels of short covering, was likely caused by misinterpretation of the Fed’s hawk/dove rhetorical dichotomy, with many speculators front-running the market and confusing over-communication and repetition of old news by officials as encouragement.
The Fed is now data-dependent, and so far data has not been encouraging. Today’s rising jobless claims could be the first indication of the delay in effect of the Fed’s actions on the economy (there is usually a 9-12 months lag) … could. Let’s see what Friday’s unemployment numbers bring, and what Powell will cook up by the 22nd of March meeting.
