Markets & Economy

Financial markets are preoccupied with Fed leadership in the absence of any other

The Fed has been pressed forward too far, doing the best it can to describe its response to an estimated future economy
  • The financial markets today reflect a world wandering through an odd passage. Not aimless (plenty of people have aims ... too many), but without direction.
  • Recent Treasury Secretaries have been a collective void (back to Rubin in 2000), while Congresses and White Houses have been committed to fruitless disagreement.
  • John Williams, president of the San Francisco Fed gave a speech last Monday; one part is fun, but the concluding paragraphs are important, frightening and overlooked.

Trying as always to grasp the present, it seems to me the financial markets today reflect a world wandering through an odd passage. Not aimless (plenty of people have aims ... too many), but without direction in two senses: not headed anywhere in particular, and certainly not led by anybody greatly worth following. The financial markets are preoccupied with Fed leadership in the absence of any other. Recent Treasury Secretaries have been a collective void (back to Rubin in 2000), while Congresses and White Houses have been committed to fruitless disagreement. The Fed has been pressed forward too far, doing the best it can to describe its response to an estimated future economy. Today’s employment report is Fed-confounding. Job growth may have decelerated from the 200,000-monthly range to 150,000, or may be distorted by seasonal adjustments. Unemployment near 5% may soon produce wage-paying competition among employers, but has not -- which should embarrass Fed forecasters i...