Comments on: Could Investors Manipulate the Fed? http://alephblog.com/2008/01/29/could-investors-manipulate-the-fed/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Sun, 12 Feb 2012 22:02:53 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Bill aka NO DooDahs!http://alephblog.com/2008/01/29/could-investors-manipulate-the-fed/comment-page-1/#comment-16668 Bill aka NO DooDahs! Wed, 30 Jan 2008 15:06:58 +0000 http://alephblog.com/2008/01/29/could-investors-manipulate-the-fed/#comment-16668 The flaw in saying that "anticipated policy moves have no impact" is that it assumes the "market" is something monolithic – which it is not. Despite any illusion of unanimity, there are always some players, and there is always some money, on the alternative outcomes. Until the probability curve collapses and the box is actually opened, we have no way of knowing if the cat is really dead. :-) The flaw in saying that “anticipated policy moves have no impact” is that it assumes the “market” is something monolithic – which it is not. Despite any illusion of unanimity, there are always some players, and there is always some money, on the alternative outcomes. Until the probability curve collapses and the box is actually opened, we have no way of knowing if the cat is really dead.

:-)

]]> By: Jeffhttp://alephblog.com/2008/01/29/could-investors-manipulate-the-fed/comment-page-1/#comment-16660 Jeff Tue, 29 Jan 2008 15:46:12 +0000 http://alephblog.com/2008/01/29/could-investors-manipulate-the-fed/#comment-16660 Since the market is looking at the same data as the Fed, knows the criteria used by the Fed, and even has speeches and statements for guidance, we should expect a correlation. Your point raises the question of direction of causation. I think that the Fed tries to influence market expectations. Here is something you can do easily to test your hypothesis. I think you will also find it to be fun. Go back to the time of your anecdote and read a few of the old FOMC transcripts. I think you will quickly find the answer to your question. Jeff Since the market is looking at the same data as the Fed, knows the criteria used by the Fed, and even has speeches and statements for guidance, we should expect a correlation. Your point raises the question of direction of causation. I think that the Fed tries to influence market expectations.

Here is something you can do easily to test your hypothesis. I think you will also find it to be fun. Go back to the time of your anecdote and read a few of the old FOMC transcripts.

I think you will quickly find the answer to your question.

Jeff

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