Yesterday’s conclusion of the Federal Open Market Committee (FOMC) meeting and the subsequent announcement and press conference was, if we were to believe the stories going in, supposed to bring some clarity as to the timing of a Fed rate hike that we have been told for about a year is coming soon. In a remarkable act of obfuscation, however, Janet Yellen et al actually managed to leave us more confused than we were before. The decision not to raise rates was accompanied by language that suggested it was still “coming soon,” leaving economists and analysts predicting next month, December and even next year as the definition of “soon.”
The market’s reaction was fascinating. As you would expect, both stocks and oil spiked immediately on the release of the word “unchanged.” That is almost inevitable in these days of computers programmed to respond to certain key words, but once the humans stepped in, the picture changed rapidly.
Within a minute or so of the announcement we were back to where we started and by the end of the day, in a spectacular example of “buy the rumor, sell the fact” we were actually trading lower on the day in both stocks and oil futures. In many ways, to those accustomed to markets, that is no surprise given those markets’ role as forward discount mechanisms.
They had accurately predicted the decision as both oil and equities had moved up for three successive days; moves…