Last night I had the opportunity to attend an event featuring Richard Fisher,  President of the Dallas Federal Reserve. The event was associated with a current Texas Monthly article (free access) that is very interesting, definitely worth a read.

An underlying concerning tone (Differing from ours)

While much of the discussion that follows is very much in line with our thinking, President Fisher was very concerned with the possibility of a default or technical default on our debts/bonds. We have shrugged this off mostly up to this point. Due to Fisher’s adamant concerns this has risen on our radar from unthinkable to possible outcomes if it occurs.  We do not want to be naïve, and it appears to be taking longer than we would have thought to get an agreement, however, if the President of the Dallas Federal Reserve Bank is this worried about a default, we will make it more of a consideration. Don’t jump……he himself does not think it will happen, but does consider it a higher possibility than us.

President Dallas Federal Reserve

Markets are Manic DO NOT TEST THEM

President Fisher echoed our fear of markets’ throwing a tantrum to get the Washington politics moving, and mentioned for the second time in such venue  a book called Extraordinary Popular Delusions, (similar to the emperor has no clothes) such the inclusion here and new edition to my reading list.

Cutting to the chase …. here is a direct quote “Markets are manic and can change on a dime, DO NOT TEST THEM!” We agree 100% Richard, hope Washington is listening.

We have done all we can do

“We….the FOMC… have provided the Fuel for the Economy, now someone must push on the gas.” Fisher speaking of lowering rates both directly and artificially via QE purchases of debt. “Legally we can only buy treasury and mortgage-backed debt owned by the government….THANK GOD”  This was another quote that stood out in our mind that we totally agree with.

“We are painting ourselves in a corner”

“I believe we have reached a tipping point with a $4 trillion balance sheet……I am not totally convinced QE is helping anymore….” President Fisher went on to say he adamantly supports a slow withdrawal of QE and while not a voting member of the FOMC at the last meeting, voiced his concern.

“…. The pitch is right down the middle of the plate …”

Honestly, we cannot make this stuff up, Fisher quoted the above and said markets were prepared and had priced the taper in, take the opportunity to taper, do not change your mind. We like this as this is EXACTLY what we said after the announcement in the U-Turn post here.

FOMC Cheat Sheet

This post was originally just the following cheat sheet, as I had no idea if the Fisher event was a fund-raiser, private, or public event. With excitement I have added a few of his comments and will save more for the next newsletter, but wanted to go ahead and include this legend cheat sheet for the FOMC…sorry about the length of this post, remember it’s an electronic diary too.

There is no telling how many times we will review this between now and January…and even later. For your reference too.

Recall Dovish represents a more accommodative stance which would lead to more stimuli and an extension of help from the FOMC.

Hawkish (present party included) less accommodative, less stimulus, less favorable for extended Quantitative Easing.

FOMC Cheat sheet

Click Chart for Giant View

Source: Credit Suisse and Zero Hedge

Have a Great Day,

John Kvale