People love options, especially if they think they're free.
The options the market loves best, you guessed it, is put options. So yesterday when the Fed failed to give a hint about its future interest rate intentions, many are saying the stock market sold off.
Central bank put options are akin to free lunches. They're quite attractive, but in reality hardly free. Expectations being what they are some will say the Fed failed the economy or is it the economy failed the Fed? That's why we have horse races, football, basketball, baseball games and bookies, at least until they are over-regulated to the bone yard heap.
A Fed that depended on questionable-at-best data for nine years is now being called uncertain, accused of uncertainty. That's a funny thought. It implies that the Fed actually knows something the rest of us don't. They don't.
The Fed are simply archaic bookkeepers without the green shades.They pour over data, most of it inaccurate to begin with. That's a fool's game, starting with inaccurate data and expecting it somehow to be accurate when one's finished.
Silence is golden, it's been said.The Fed's loud silence, many are now saying, is damning. So where is the Fed today?
An acquaintance of ours loved to tell the story about his attempt to become a major league baseball pitcher. A highly touted rookie, in his first start after giving up five runs and 10 hits in the first inning, his manager finally waddled to the mound, looked him directly in the eye and, his slow southern drawl, said:
"What the hellllll's goin' on?"
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