Richard Fisher, President of the Federal Reserve Bank of Dallas, today said that the Fed's stimulus program could not continue indefinitely. We've heard this chatter from Fisher before and it is one, non-OMC-voting man's opinion. Nevertheless, he feels compelled to give his opinion, as well-known as his viewpoint is.

 

"We've changed and impacted the markets because of our intervention and I understand there's sensitivity, but markets should also bear in mind that this program cannot go on forever," said Fisher, who is in Melbourne, Australia, speaking at an Economic Development function.

 

 (Memo to Fisher: nothing is forever.) 

 

Atlanta Federal Reserve President Dennis Lockhart also said that the Fed could righten policies come December. 

 

"Maybe him repeating, or bringing the message forward for those who hadn't heard it" hit investor sentiment, said Mark Luschini, chief investment strategist at Janney Montgomery Scott, referring to a report from Bloomberg News.

 

"I think it's possible, I don't think it's plausible," said Luschini, who feels the Fed is more apt to start reducing its monthly asset purchases in March.

 

Lockhart actually said this: 

 

"I don't think the circumstances rule out a consideration in December," the January meeting "could turn out to be more complicated" because of fiscal policy concerns. Lockhart also said the October job data was "encouraging," but not "decisive" evidence of a sustainable improvement in the labor market, which is the goal of the bond-buying program.

 

Most notably, Lockhart, who is also not voting member of the FOMC this term, pointed toward inflation as a key driver of future FOMC votes.

 

"I'd like to see some movement toward the target" before tapering, Lockhart said in a Bloomberg Radio interview. Inflation is "stable but too low" and a move up would "give me some confidence we are not dealing with some downside scenario that might develop." 

 

Lockhart said  additionally that his consideration of tapering will be driven by data that "focus mostly on employment and inflation, both of which are pretty far from the mandate-consistent levels we are seeking."

 

Lockhart is seen by many central bank observers as a bellwether of the committee's consensus and a reliable guide to where monetary policy is heading. 

 

Some of this Fed talk tells us that the non-voting members feel that their opinions can possibly sway voting members. We doubt that, since all the members have sterling credentials, long histories of service both publicly and privately, and no doubt hold strong opinions themselves. 

 

We also heard from another voice, this one, like Fisher's, one that will be heard in the next FOmC term. MNI of the Deutsche Boerse Group reported this:

 

Minneapolis Federal Reserve Bank President Narayana Kocherlakota warned Tuesday that reducing Fed asset purchases from current levels would exert a "drag" on an already sluggish economy and said the Fed should consider expanding bond buying and taking other steps to stimulate the economy to achieve "maximum" employment "as rapidly as it can."

Kocherlakota, who will be a voting member of the Fed's policymaking Federal Open Market Committee next year, said the FOMC should also consider reducing the rate of interest it pays on excess reserves (IOER) from the current 25 basis points.

And he repeated his call for lowering the unemployment threshold for considering hikes in the near zero federal funds rate to 5.5% from 6.5% - an idea that got some theoretical support from a Federal Reserve Board research paper released last week.

This makes at least 6 voices for a continued dovish position that will be on the 2014 Federal Open Market Committee. 

Why investors and traders seize on slightly negative "news" while ignoring the rest of the story is always a great mystery. But they do, and we must live with that reactionary way of thinking.

 

Oil has crashed to near $93 per barrel. That alone should be helping the world economy. On the same kind of far out sentiment that slapped gold and the equities markets, the yield on the 10-year bond jumped to 2.776%. 

 

Once again, as always, we urge you to pay attention not just to fundamentals, which have a way of confounding matters, but especially to technical analysis, which are usually a better guidepost.