Fed Post-mortem

The Fed delivered a hot result and the long press conference was studded with "ums" and awkward stammering pauses. Here's a few takeaways:

It's not the "Evans Rule." Evans didn't come up with it and its more of a guideline than a rule. 6.5% unemployment is a public target for a "soft-NGDP" compass (putting US and UK on similar paths) The steering policy is a rejection of the incredibly flawed Taylor Rule. A legacy move as Taylor has been mentioned as Bernanke replacement. The 2.3 - 3% GDP mention was lost in the employment cloud, cue the stagflationists.

Deeper in the fog, Ben said the balance sheet growth was not stimulus but the mix of assets was. I don't see it. Also, the Fed opted to spread across the 4 to 30 year spectrum. This was presented as a "balanced" option. No one in the room questioned the Twist experiment, even as efficacy became the hot topic.

The Chairman addressed our pet peeve in a single thought. They were striving to be more transparent and struggling with cost/benefit from a standpoint of efficacy. Pro-tip: Pull back on the transparency and the efficacy increases. (St. Louis Fed white paper)

Bottom-line, The developed world central banks continue to fight the debt depression and have upped their games as fiscal policy has apexed. That is a "good thing". The US yield curve is steepening and the dollar is holding while others push harder to get their fiat down. (Most notably, the yen.) The headwind that was Europe is calming. Nominal is the new real.

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