From Mysterious Fed to “Just like You and I”?

On Wednesday April 27th, 2011 the first ever live post FOMC meeting discussion will be held with Big Ben Bernanke conducting a live 45 minute (a bit long for my tastes) interview just after the FOMC public delivery of written statement.

A couple of observations from our camp:

• Email and text written comments often lack color and are tone indifferent, so the idea of having a live press conference is a good one in our opinion.
• The written report is delivered at 2:15 EST and Bernanke will go on air and be finished a full hour prior to US capital market closing time. We think this is a good idea given market participants propensity to shoot first and ask questions later.
• As mentioned above, the estimated time of the interview is 45 minutes, which to us is a bit long, 30 minutes would be plenty to bring color to the press release.
• This is not a unique idea, many central banks abroad currently have post announcement press conferences.
• We do not think this press conference will have anything dramatically different, however we do think this conference is setting the stage for future announced rate increase explanations.
• This press conference will make the fed more human. Bernanke’s multiple 60 minute appearances and other, new to his position, appearances are making the fed more lifelike, in our opinion, and this helps with comfort in times of stress.
• This is a complete 180 from historic precedent. Going back several decades, the Fed did not even announce interest rate decisions, they just acted, and investors had to figure out what they were doing. We have come a long way, from mysterious Fed to “Fed is just like you and I.”

We do not think there is anything to fear from Bernanke’s press conference. and short of a few pointers, (Who are we to say anyway?) think this new press conference is a good idea. As we said in our latest performance cover letter “We suspect the Federal Reserve will warn us, warn us again, then warn us a final time and finally commence raising rates….”  and we do not even think this is a warning.

While the stage may be setting, we still feel the show is far from beginning.

Have a Good Day!

JK