2024 Fed Odyssey
“Fed Day is a Wall Street Ceremony where Bull Monkeys and Bear Monkeys sacrifice their Option Premium as Tribute to the Market Gods"
- Le Shrub, from "Reminiscences of a Shrub Operator"
As we approach the most important Fed meeting in the lifetime of a fruit fly, it’s important to frame this event correctly.
To start with, there are two fundamental mistakes that Investors make with respect to the Fed and economic data in general:
Fundamental Mistake #1: “Monkeys care about the Fed and economic data.”
This is blatantly wrong. You think that someone who buys “Retardio”-coin actually cares whether inflation spikes or not? The hint is in the name of the asset class they are trading. “Show me what you own, I’ll tell you who you are” kind of thing!
Unless the Fed event is an absolute shocker, the monkeys will keep doing what they are doing.
Fundamental Mistake #2: Assuming the Fed WILL DO what they SHOULD DO.
This one probably is up there in the top mistakes that investors make. Policy Makers have complex agendas, multiple reaction functions as well as personal biases. Besides, when Policy Makers make a mistake, that’s when the big money can be made!
Which brings us to Wednesday’s Fed Meeting.