A lot of what gets written recently about the the stock and bond markets centers on the risk of investor complacency.
But with a little imagintion and illogic--we prefer both in our assessments--the most complacent of all just might be Fed officials. In a nutshell here's their take on things.
1. QE unwinding will go smoothly because we have carefully planned for it.
2. We have spent numerous hours planning--see comments by a Fed member at Jackson Hole--devisng a scheme that ensures such.
3. We know better than anyone else just when to crank up the interest rate pump.
4. We are "noise" experts
5. And even if things do go a bit awry, we have the tools for correcitng it.
6. Just trust us and let us do our job.
7. We're bureaucrats and we're here to make things better.
Flasback now to the speech Fed Chair Yellen recently gave to the IMF about what's needed and this quote:
"...a regulatory umbrella wide enough to cover previous gaps in the regulation and supervision of systemically important firms, and markets can help prevent risks from migrating to areas where they are difficult to detect or address."
Now it's a sure bet whether Yellen or whoever wrote or helped write the above felt puffed up with pride after proof readng that puppy. If we didn't know better we'd suspect she was addressing a convention of bird watchers seeking better protection from sun damage.
Yellen then rolled out what's becoming a favorite term of central bankers thoughout the intergalactic solitary universe, macroprudential. Macroprudential is one of those abstract terms that belongs more in an art dealer's studio than in the real push and shove economic world.
But oh well. We better stop. We're starting to sound a bit....well, complacent.
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