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All Conundrums Matter

Jeffrey Snider profile picture
Jeffrey Snider

Since we are this week hypocritically obsessing over monetary policy, particularly the Federal Funds rate end of it, it’s as good a time as any to review the full history of 21st century “conundrum.” Janet Yellen’s Fed has run itself afoul of the bond market, just as Alan Greenspan’s Fed did in the middle 2000s. But that latter example wasn’t truly the first conundrum for monetary policy. There remain a great many questions (in the mainstream, anyway) about the dot-coms.

If we define conundrum more broadly as I believe more appropriate, then it’s not just about UST yields long or short. It is instead the lack of (monetary) effect through Federal Funds rate management. In the early 2000s this was apparent in a whole range of factors – starting with the stock market.

It had become conventional trading wisdom that, under Alan Greenspan, you don’t fight the Fed. He was the “maestro” who at his whim sat enormous monetary power. This idea of the so-called Greenspan-put was born sometime in 1998 after the LTCM debacle, a fiasco that nonetheless seemed to validate the premise.

The dot-com bust, however, pushed stocks very sharply lower over an unusually lengthy period of time, taking almost three years to fully complete. During that time, the Fed was not at all idle (as you can plainly see above). In less than a year, Greenspan had reduced the Federal Funds target from 6.50% down all the way to 1.75%. While the rationalization for its actions was largely economic in nature, there can be no denying that under a discretionary policy regime the FOMC heavily considered the stock market.

That was supposed to be massive “stimulus” and “accommodation” that which no stock investor should or could ignore. And yet, it clearly had no effect. The dot-com bust went on further despite what in mainstream

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Jeffrey Snider profile picture
As Head of Global Investment Research for Alhambra Investment Partners, Jeff spearheads the investment research efforts while providing close contact to Alhambra’s client base. Jeff joined Atlantic Capital Management, Inc., in Buffalo, NY, as an intern while completing studies at Canisius College. After graduating in 1996 with a Bachelor’s degree in Finance, Jeff took over the operations of that firm while adding to the portfolio management and stock research process. In 2000, Jeff moved to West Palm Beach to join Tom Nolan with Atlantic Capital Management of Florida, Inc. During the early part of the 2000′s he began to develop the research capability that ACM is known for. As part of the portfolio management team, Jeff was an integral part in growing ACM and building the comprehensive research/management services, and then turning that investment research into outstanding investment performance. As part of that research effort, Jeff authored and published numerous in-depth investment reports that ran contrary to established opinion. In the nearly year and a half run-up to the panic in 2008, Jeff analyzed and reported on the deteriorating state of the economy and markets. In early 2009, while conventional wisdom focused on near-perpetual gloom, his next series of reports provided insight into the formative ending process of the economic contraction and a comprehensive review of factors that were leading to the market’s resurrection. In 2012, after the merger between ACM and Alhambra Investment Partners, Jeff came on board Alhambra as Head of Global Investment Research. Currently, Jeff is published nationally at RealClearMarkets, ZeroHedge, Minyanville and Yahoo!Finance. Jeff holds a FINRA Series 65 Investment Advisor License.

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