When Doves Cry

How to begin?   When TMM took over from the original Macro Man (TOMM?), they pretty much jumped right in without much by way of introduction.  I can only hope, incidentally, that they didn’t labour over their prose for as long as I’ve spent composing this meagre triad of sentences.


I have chosen the name Represso, and I’m going to be helping to look after the place now that the previous tenants have fled.  I am a long time reader of this space, and have known a few of the previous scribes personally and/or professionally.  I cannot promise to match what TMM or TOMM did before me, or even, if I’m honest, to try.   Nevertheless, I plan to offer the occasional scribbling as part of Macro Man mk. III.


Fortunately, there’s plenty to write about these days; ‘tis a pity that TMM aren’t around to share their insights.   Nevertheless, the show must go on, even if it bombs on opening night.  And how else to describe Janet Yellen’s inaugural performance?  From her initial appearances a few months ago, my untrained ear associated her accent with George’s mother from Seinfeld.  Based on her performance last night, I'm not sure if the substance was far off from what Estelle Costanza could have managed.   

‘Twas bad enough that the text of the statement reached a record length and exhumed the corpse of Greenspan’s policies by reviving the “considerable period” low-rate promise.   But to then a) send markets a-flutter by ratcheting the dots higher, and then b) breezily wave off the significance of the shift by saying "sometimes they go up, sometimes they go down" can be described most charitably as "confusing."   The coup de grace, of course, came when Yellen helpfully clarified "considerable period" as "six months, that type of thing."

There you have it, ladies and gentlemen:  the head of the Federal Reserve (and prior head of the communications committee) has shows us the future of forward guidance: Six Months, That Type of Thing.

Now, it seemed quite clear that she was somewhat flustered by the question and made up the answer on the fly.   This of course raises the question of what sort of preparation she did before the presser:  H?    Anyhow, it was a pretty appalling performance, as it seemed like she wanted to be dovish but ended up sending the greens down 20+ ticks.  She sounded less like Chair than a Stool.  (She's going to have to earn that fourth leg in the future if she wants to regain Chair status- in this space at least.)

As I watched US yields rise across the board, I confess that I could not resist the temptation to thrown Prince onto Last FM.    Sure enough, before too long one of my favourite tunes came on.  Strangely, however, the lyrics seem to have changed.   See if you can spot the difference:

Take if you will a picture
Of forecast dots to one-six
The sweat on my forehead covers me
Can my Yellen
Can you picture this?
Dream if you can a trade-floor
An ocean of losses in bloom
Punters strike curious poses
They feel the hate
The hate between me and you

How can you just leave me standing
Long in  a world that's so cold
Maybe I'm just too demanding
To think that you're just like Bernanke, twofold
Maybe you're just like Paul Volcker
He made sure inflation died  
Why do I feel so much older?
This is what it sounds like 
When doves cry 

Check if you will the green pack
It's been on a nasty ride
You've got the guidance all effed up
Don't make me beg you
Even doves have pride

How can you just leave me standing
Long in  a world that's so cold
Maybe I'm just too demanding
To think that you're just like Bernanke, twofold
Maybe you're just like Paul Volcker
He made sure inflation died  
Why do I feel so much older?
This is what it sounds like 
When doves cry 

When doves cry
Etc etc


http://www.maxiocio.net/prince-when-doves-cry-video_c8b4f1b8b.html

 


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Anonymous
admin
March 20, 2014 at 11:21 AM ×

I don't understand why she said "6 months" so bluntly. Any Bank prediction extraordinaire knows that being accurate is a death trap. Could have gone for something like "between 6 to 18 months" that sort of thing... Talk about "Forward Guidance", isn't 6 months as accurate as can be?
Well anyway... thanks Represso for the post. Good to see this blog alive

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amplitudeinthehouse
admin
March 20, 2014 at 11:25 AM ×

Where to begin? try the Hang Seng chart.
We look forward to more Macro Man.
The institution of go getters that learnt how to trade under Ben's unique talent for clocking on grass tracks...take it away Yellen.

Ps..keep it , it's yours!

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Anonymous
admin
March 20, 2014 at 12:02 PM ×

C Says
There's this ruddy-faced, jolly little lady whose been stamping my library reservations for quite some years now. She took voluntary redundancy last week. When I asked her what she would be doing she replied, "Oh ,I've got quite a few things planned". Little did I know she had taken over the Fed two-legged stool !

As to "why she said "6 months" so bluntly" , in the parlance of my favourite country they might say ,"because she's a fecking idjut".

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Anonymous
admin
March 20, 2014 at 12:17 PM ×

So the big question now is Who is replacing that "jolly little lady" at your local library?

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Anonymous
admin
March 20, 2014 at 1:19 PM ×

Welcome aboard Captain Represso - you've just proved you have what it takes - prose 'n' verse !
Look forward to your next donation; hope the next "labour" is easier.
Quality over quantity is always appreciated....Thank-you for taking the time to contribute

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Hotairmail
admin
March 20, 2014 at 2:01 PM ×

When asked, she should have just said "how long's a piece of string?".

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Anonymous
admin
March 20, 2014 at 2:08 PM ×

I just remembered last year the big Ben said something like “in the next few meetings” to end QE. And the subsequent episode on Fed's credibility.

This is worse than that. For her credibility sake, she has to raise rates a year from now.

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Polemic
admin
March 20, 2014 at 7:24 PM ×

my first thought was it was one of my teenage daughters replying. "sorta of like sorta coulda innit like mebbe yeah like rate taper hike stuff"

she needs to go on a crash gravitas course.

price action meantime is once again failing to please the equity bears. God forbid some positive news comes out which strata of cloud would prices be piercing.

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Anonymous
admin
March 20, 2014 at 7:33 PM ×

From crypto greenspan to bearded ben to the old librarian/teenager what a long strange trip this has been

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Antipodean
admin
March 20, 2014 at 7:37 PM ×

'She sounded less like Chair than a Stool'

brilliant, welcome Represso!

US data picking up after winter slump,

China starting to move to underwrite growth,

Path cleared for higher rates

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Anonymous
admin
March 20, 2014 at 7:48 PM ×

C Says
"China starting to move to underwrite growth,"
Strange ,because it looks to me like they are trying to squeeze excess credit out of the system and I always though credit expanding not contracting correlated with growth.
I guess this is why we have two sides to a market :)

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Nic
admin
March 20, 2014 at 10:12 PM ×

When Doves Cry, Hawks Fly
:)

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Anonymous
admin
March 21, 2014 at 6:02 AM ×

Iceman says..

Long time lurker for this post since TOMM and its great to see someone taking over it. Very frequent reader but lack the english (and knowledge for that matter) to contribute anything meaningful.. but since its the inaugural post for the new owner, thought i would show some support..

So everyone is harping on about why reds were smacked cos the average of the dec 2015 FF is now at 1.13% vs 1.06% in dec fomc. However people seem to have failed to mention there were 3 absent fed members at the meeting of which all 3 are voters - Fischer (dovish), Brainard (dovish) and whoever is dumb (honored) enough to accept the replacement for Raskin. Now if the 2 missing put in their "dots" at 0.75%, miraculously the average drops to 1.08%.

EDZ5 off nearly 20 pts a bit over innit gov?

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amplitudeinthehouse
admin
March 21, 2014 at 8:49 AM ×

Iceman, you ain't Heisenberg in disguise?

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Anonymous
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March 21, 2014 at 9:18 AM ×

C Says
My old librarian just drove past in a Lamborghini having quickly cashed in her pension (thanks George) and used it to short LB's Russian equities !

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Hotairmail
admin
March 21, 2014 at 10:48 AM ×

I can't wait for the end of Yellen's term. Just who or what is going to carry on the tradition? http://www.streetinsider.com/images/news2/88/8894338/fedheight.jpg

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Proofreader
admin
March 21, 2014 at 11:19 AM ×

Copy and Paste from MS-Turd, no?
The default double-space after a full-stop is the give away. It looks bad enough in serif fonts, but it's totally naff in sans serif.

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Anonymous
admin
March 21, 2014 at 12:13 PM ×

I am going to give the old Librarian another chance!... to wrong-foot the market
Any thoughts on Gunvor sanctions? just asking, since I don't know jack about how commodity traders operate

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abetasoup
admin
March 21, 2014 at 4:33 PM ×

I think she just gave an arbitrary number to close the question quickly. She has already stated that tapering and rate rises are contingent on economic data. Maybe she thought she was adding "certainty," but it's likely she just goofed on her first large performance... many other FED chairs have struggled to get used to the magnification of their every word.

If growth slows she will provide greater stimulus. She doesn't have to do anything to provide credibility at this point except stay the taper course until a hiccup in growth comes along. That would be sticking to her and Bernanke's script. After that is a completely different ball game.

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Anonymous
admin
March 21, 2014 at 11:04 PM ×

C Says
This "equity bear" doesn't have a problem with this stuff. Rotation or churn whilst internal breadth loses strength is exactly what I expect to have in my face as I build a position. I would be concerned if the internals supported a higher market ,but they don't at this point. Meanwhile next month the financials meanwhile next reporting you know what's draw closer.

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Anonymous
admin
March 22, 2014 at 8:18 AM ×

"Fischer (dovish)"

Nonsense.

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