Given how truly badly we are doing in meeting our employment mandate, I argue that the Fed should seriously consider actions that would add very significant amounts of policy accommodation.- Fed Chicago Bank Chief Charles Evans
Even considering his well-known dove status, the emphasis on the Fed's poor job handling the recovery by Evans certainly made the masses take notice. The Fed isn't just doing a bad job at fulfilling its employment mandate, it's doing a "truly bad" job. However, I would cut the Fed a little slack here as it could only do so much to bolster employment; fiscal policy has to come together, as do the various branches of government.
Above all else, this week's Fed speeches suggest fairly strong disagreement in the ranks of the FOMC that will have to be consolidated under the leadership of Chairman Bernanke if the market is to receive its pound of easing flesh.
That said, Thursday could very well be a turning point for the equities markets as the tag team of Bernanke and Obama give speeches. Notice that I did not reveal which direction the markets are likely to turn, it really does depend on each word contained on the piece of paper (Bernanke) and teleprompter (Obama). If push came to shove, I assign a greater than 50% chance that stocks pare some of Wednesday's gains for there will be many common messages weaved into the speeches of both extremely powerful men.
The ties that will bind:
- This far into an economic recovery, the economy needs added fiscal stimulus.
- Fiscal stimulus measures put forth by the White House broadly do not offer the unemployed pool new-age skills.
- Fiscal stimulus piles on more debt to an already deeply indebted nation.
- A third round of monetary stimulus is needed, again serving as an artificial boost to free markets and promoter of producer and consumer price inflation.