Headfakes and Credibility

Ah, to be so wrong is a wonderful thing...and something the Fed will likely have to experience as well after the election.

So what is it then, a "calamity" as Mr. Poole said a little over a month ago? Something else? Who knows?, and that is the problem.

After the Fed has preached a new era of "transparency", after it has enumerated the importance of headline vs. core measures of inflation, even after it has reminded us it holds an "infaltionary bias" time and time again, we now have a 50 basis point cut.

And, adding insult to injury:

"Today's action is intended to help
forestall some of the adverse effects
on the broader economy that might otherwise
arise from the disruptions in financial markets..."

"Forestall"??? The fed has now jettisoned its "data dependent" stance (which obviously is an ex-post determination) for a shiny new machanism called "forestalling" What does this mean and how do they do this? What credibility does the Fed now have?

Predictably, the dollar has been "adversely effected" by this and will likely have its worth month in perecentage terms in 30 years.

Oh, and lest I forget, all commodity metals closed limit up today.

Everyone who reads this column should keep a very close eye on 3rd quarter GDP figures, if they come in hotter than expected, more fireworks to follow.