Hilsenrath is the F_E_D's Leak

Yesterday Jon Hilsenrath from the WSJ sent the market higher when he said that the F_E_D, which was widely expected to remove the "Considerable Time" language which is a reference to how long the F_E_D will wait to raise rates AFTER QE has ended. When questioned during the last F_O_M_C meeting in the presser, Yellen said "Considerable Time" is  6 months. there's debate about whether this was off the top of her head in a press conference or is this really F_E_D forward guidance that maybe she let slip and might regret.

The market WIDELY has expected the "ConsiderableTime" language to be removed this meeting largely because in speeches from Hawks, Doves and Centrists, nearly all have said it's time to remove that language and update forward guidance for rate increases.

Judging by what we know as the F_E_D reduced MBS by another $5 billion today and Treasury purchases by $10 billion today, QE is set to expire next month which would theoretically put the first interest rate hike around April of 2015, well before the market's current sentiment of June 2015 or Q3 of 2015. Expect Yellen to back away from the 6 month definition for "Considerable Time" during the press conference, this is where you REALLY want to watch how the market responds to the Q&A and you'll find out some interesting information just as we did when QE 3 was introduced, but the market topped the same day (Sept. 13th, 2012) and went on to lose -8% in the months ahead and didn't regain those highs until nearly 4 months later as Bernake had inadvertently made clear in the press conference (at 2:24 p.m., can you believe I still remember it? It was that big at the time), that the F_E_D was changing their yardstick or at least moving toward a change from quantitative guidance based on dates to qualitative guidance based on incoming information, but  much less certain and the market hates uncertainty. That is exactly why the market topped after QE3 was announced on the same day at 2:24 p.m. as Bernanke accidentally or perhaps purposefully, let that cat out of the bag. The point is, listen to the press conference.


More to come as there are a number of small items that are lost in the shuffle that mean a lot to the bigger picture.

I just want you to catch the press conference and watch carefully.