FED FAILED, But We’re Okay

In a CNBC interview today, Chicago Federal Reserve President Austan Goolsbee said, “The Fed’s job is very straightforward: maximize employment, stabilize prices, and maintain financial stability.”

Too bad they missed all three of those marks recently. Everyone knew the rate cut was coming, and by everyone, I mean the entire planet. Everyone was waiting for it. First Europe, and, just last week, Japan got sick of waiting.

Mr. Goolsbee also said about the low hiring in July, “The Fed’s job is not to react backward-looking to one month’s numbers…You can see that it’s the market’s job to react, and it’s the Fed’s job to act. And one of those moves with a lot more volatility than the other.”

His language implies the market, investors, you and me are impetuous, and the Fed are the reasonable, cautious ones. I’d have side with the market on this one. The Fed created the volatility by failing to act when they knew they should have: When the World expected it! Not like a baby impatiently waiting for its bottle, but after years of high interest rates and clear signs inflation was down, the Fed should have acted to lower interest rates for a soft landing in March.

Now, the Fed must make a large rate cut at an “emergency meeting.” Who’s the reactionary party? Who’s being volatile? Who cares?!

I only have one question for too many issues: Are we okay?

Investment wise, we’re okay. Look back four or five months, even better a year. The market started today where it was in March. What was anticipated in March? Oh yeah, a rate cut by the Fed. The cut didn’t happen, and markets dropped. Then the Fed kept hyping September. Everyone jumped on.

This last week, the market spoke. Now everyone is frustrated. And some are mad.

The good news is the market has recovered most of its losses as I’ve written this article, and the trading day is young. Maybe it’ll dive even further or rocket back to where it was a week ago. The important thing is to remember that the market is mostly moving upward at an impressive rate.

Hang in there, stay diversified, and don’t do anything reactionary.