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Ribeyes And Belvedere

Summary

Well it's hot as hell again and walking anywhere wearing a suit or anything that conveys respectability is well nigh impossible.

As anyone who follows these things knows, the Fed made its reaction function infinitely more complex last September by explicitly admitting that international financial conditions played a role in the decision to forestall.

So what does everything we've been talking about in terms of rising LIBOR and a shrinking commercial paper bid actually mean when it comes to Fed policy? It's simply another excuse not to hike.

Well it's hot as hell again and walking anywhere wearing a suit or anything that conveys respectability is well nigh impossible if you don't want to look like you just walked out of a sauna by the time you get to where you're going.

So I'm staying in tonight. I've got some ribeyes which look ok, one heirloom tomato, and I can deal with Belvedere and fresh squeezed lime juice if it means not ending up sweat soaked on a restaurant patio somewhere.

I don't get a whole lot of time to read comments although I do my best. Typically I just respond to the ones that are funny and/or angry. The serious questions take longer to answer and I just can't because, well, because I have to pay the bills during the day and at night someone, somewhere, has some expensive liquor for me to drink.

But tonight I scanned as many as I could and there were some questions about the effect money market reform and rising LIBOR would have on the real economy (NYSEARCA:SPY) and on the Fed's policy calculus.

Whoever asked those questions (God knows I'm not going to go back and see, I already spent an hour reading the comments) is perceptive.

As anyone who follows these things knows, the Fed made its reaction function infinitely more complex last September by explicitly admitting that international financial conditions played a role in the decision to forestall a hike. Of course Yellen could have just saved us all some time by walking up to the podium, grabbing the mic, and saying "China." Then drop mic, walk out. Enough said.

Anyway, what the Fed did there was "remove the fourth wall." I've mentioned Deutsche Bank's Aleksandar Kocic previously. The guy's a damn genius, although if you're not on his level (and I'm not), you can lose him. Here's what he said after last September's Fed "clean relent:"

I waited on the corner for my blind date. When this girl walked by, I said: "Are you Linda?" She said: "Are you Richard?" I said: "Yeah." She said: "I'm not Linda."

September FOMC meeting felt like a blind date that was never meant to be. As the market developments were unfolding, Fed members simply didn't like what...


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