00:00What are your thoughts of this piece in the FT this morning on Kevin Walsh?
00:05Well, my initial thought would be pretty much like everybody probably on Wall Street,
00:08that it's damage control by the Fed, an effort to kind of keep the markets from overreacting
00:14to the press conference that Walsh had and the criticism he's received since then.
00:20I think one of the things that's happened is that people on Wall Street have misunderstood
00:26a little bit of what Walsh is talking about.
00:28He wants to get rid of the forward guidance, such as we will keep this rate unchanged
00:33until we get to X date or X condition in the economy, versus if inflation continues to rise,
00:40we will have to consider what we're going to do, which is the reaction function.
00:45Those two things have gotten confused with people on Wall Street.
00:49On the other hand, Walsh has kind of missed the ball when he's talked about the market
00:54should keep its eye on the ball rather than the referee.
00:58The Fed's not the referee.
00:59The Fed is a player in the game, and no matter what he wants,
01:03you're always going to be anticipating what the Fed is going to do
01:06because the Fed's reactions are going to change the yields that you're factoring into your models.
01:13So there's a little bit on both sides here.
01:16Maybe Walsh is trying to calm things down until he can explain more at Jackson Hole.
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