Ok, Ben Bernanke is going to transform me from Dr Brightside to Dr Evil. I'm just going to chalk it up to stubbornness and rhetoric, I suppose. I heard Steve Liesman of CNBC make a great point this morning about Big Ben; he descends from academia so until he can touch and feel the data he's going to sit on the sidelines, that he's not going to look at what's coming until it's here. I find that quite frustrating, but I have to imagine pressure is mounting hourly and the Fed will be forced to cut rates soon or they will be losing any real credibility that they are worried about inflation. They have a looming financial crisis on their hands that they can relieve and allow the underlying relatively strong U.S. economy keep it's momentum.
Just the facts to state my case
-The Fed should follow the markets, the 91 day treasure closed today at 4.038% down nearly 100 basis points in a week. This is an incredible turn of events.
-The headline CPI is moderating nicely gaining only .1% . Also the chain weighted 12 month core CPI is at 1.8%, well within the feds comfort zone, so I believe this gives the Fed room to duck and cover and cut.
-Liquidity in the financial markets is almost frozen. Commercial paper is not trading as it should thus not allowing many institutions to meet their daily obligations. This is despite the Fed's various attempts in the last few days to inject liquidity.
1 comment:
Nice monkeys. Maybe big ben is shooting for stagflation. So much better than a strong growing economy.
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