If things weren’t slow enough already on Wall Street due to summer doldrums before summer has even begun, the announcement coming Wednesday from the Fed has made stocks go comatose ahead of the “news”. Expect Monday’s dirge to continue until the Big Event at 2:00 p.m. EDT. Powell & Co. has been in such a dither lately that anything he says will be greeted with surprise. We won’t hazard a guess as to which direction stocks will move. [Late-breaking bulletin: Stocks are lunatick-ing vertically at the moment (9:51 a.m. Tuesday) caught in a violent short squeeze ahead of tomorrow’s momentous news. Ironic that the rally should seriously undermine whatever flimsy rationale the Fed can concoct for easing.]
Although everyone knows the central bank determines when to ease or tighten based on what the stock market is doing, the pretense of using sophisticated tools to shape monetary policy is a silly game with rules that investors dare not flout. The first is “Don’t fight the Fed.” It is at times like this, however, that monetary policy is so muddled and convoluted that it’s difficult for investors to know whether or not they’re in harmony with monetary policy. Sit back, enjoy the show, have few laughs as the alchemists do their stupid thing, and you won’t be far out-of-sync.