By Macro Man
That was....surreal. It kind of says everything you need to know about yesterday's statement and SEP that the first question Yellen answered yesterday was "does the Fed have a credibility problem?" Her incoherent reply to that query, as well as further attempts to defend the indefensible, represented one of the worst performances that Macro Man can recall seeing since Brazil's implosion in that World Cup semifinal a couple of years ago. In that vein, let's look at some "highlights" of the press conference through the prism of football chants:
On the heels of higher than expected core PCE inflation and a fresh high in core CPI released yesterday, the Fed leave its 2016 core PCE forecast unchanged and marks down its 2017 forecast:
Despite recent upside surprises in core inflation and a nascent bounce in commodities, the Fed median dot drops 0.50% in 2016 and 2017. At this juncture it seems clear that the only purpose of the dots is to be marked lower.
After blithely ignoring international complaints during the entire QE era, the Fed suddenly finds religion about the significance of global developments. Yellen goes so far as to cite the always volatile Japanese GDP figures as a reason for concern.
Yellen trots out the usual song and dance about the dots not being a forecast, the committee reserves the right to change their minds, etc.
Incredibly, Yellen seems to claim that the recent pickup in inflation is being driven by things that aren't significant over time. You know, like shelter, medical care, and other disposable luxuries like that.
No doubt the rest of the dovish coterie will appear on the wires shortly to rationalize the farcically cherry-picked (and presented) stance:
Perhaps we should leave the last word to Yellen, speaking in a personal capacity....
Truly, an almost incomprehensible fit of March madness. Which is fitting, given that the NCAA college basketball tournament starts Thursday. As a public service to readers, Macro Man has created his own financial market version of the March Madness bracket. Fill it out when you're done with your hoops version.
Just remember, a top seed has never lost in the first round. After Wednesday's performance, however, Macro Man has grave doubts the top seed in his tournament....
Source: March Madness - Macro Man