Buzz on Business for December 19^th, 2023

The monster I created has taken on a life of its own. I fear my own creation.

Could this be a quote from The Federal Reserve Bank of the United States?

Stock Market Report

Yesterday, we reported that the S+P 500 closed on Friday with a loss of less than one point. Well, the same thing happened to the Dow on Monday, except the Dow saw a gain.

• The Industrials closed at 37,306, up a tiny eighty-six-one-hundredths of a point.
• The S+P 500 was up twenty-one points, about one-half of one percent, and closed at 4,741.
• The Nasdaq Composite was up ninety-one points, six-tenths of a percent, and it closed at 14,905.
• The XRT Retailers finished with a small loss. They were off one-tenth, or nine cents, and closed at $70.76

Bond Markets

Bonds traded in a tight range and closed with little change on the session.

• The yield on the two-year Treasury was basically flat. It was down, but less than half a tick. It now yields 4.451%
• The twenty-year closed at 4.221%. That’s up less than two basis points.

Oil and Gold

• Oil opened much higher but sold off throughout the day. It closed with a gain, though. It was up $1.08, and a barrel now trades hands at $72.81.
• Likewise Gold. It opened with a twelve-point gain but gave almost all of it back in the first half hour of trading. It finished with a gain of $4.80 at $2,040.50.

Confused? Fed Tries To Pump the Brakes

There isn't much to report from the economic or earnings calendars today, although this week looks to be quite busy. However, that doesn't mean there's no news at all. In fact, yesterday, we had a lot of Fed-Speak on display! After causing the biggest rally in stocks and bonds we've seen in months or even years, the Fed now seems to regret the monster it has created.

• New York Fed President John Williams stated that policymakers were not "really talking about" interest rate cuts "right now." Did he read the Dot Plot?
• Austan Goolsbee, President of the Chicago Federal Reserve Bank, claimed he was "confused" by the market’s reaction, adding that Fed members "don't debate specific policies speculatively about the future." Which, of course, they do. I doubt they do little else.
• Cleveland Fed President Loretta Mester also attempted to push back, saying that the Fed's next policy phase isn't about when to reduce rates but how long we need to keep them high to “be assured that inflation is on that sustainable and timely path back to 2%." Perhaps if you had, ya know, said that.

Gawd, we love this stuff.

Mea Culpa: Regional Fed Chiefs Not White House Picks

On Sunday, we published the latest premium episode of our podcast on the Federal Reserve. In that podcast, we went into some detail about the structure of the Fed, and made an error—actually, we contradicted ourselves—at one point saying that the Presidents of the fourteen regional Federal Reserve Banks were appointed by the US President.

The Presidents of the fourteen regional Federal Reserve Banks are not nominated by the US President. They are selected by the Boards of those banks. All of the members of the Board of Governors of the Federal Reserve, including the Chairman, are nominated by the President and confirmed by the Senate, but not the regional bank Presidents.

We apologize for our error.