US Federal Reserve

It has been a trying time for the world's central bankers, who for decades have been used to the "high finance" community's adulation, derived from the deliverance of policy wrapped in so much opacity, gibberish and contradictions, that neither the central bankers, nor the markets, had any idea what was going on (see the Greenspan tenure), or dared to admit it was all meaningless drivel, resulting in phases during which the market was on "autopilot" and culminating with a bubble and subsequent crash, "rescued" by an even greater asset bubble and even greater crash, etc.

Authored by Robert Huebscher via AdvisorPerspectives.com,

Robert L. Rodriguez was the former portfolio manager of the small/mid-cap absolute-value strategy (including FPA Capital Fund, Inc.) and the absolute-fixed-income strategy (including FPA New Income, Inc.) and a former managing partner at FPA, a Los Angeles-based asset manager. He retired at the end of 2016, following more than 33 years of service.

 

As we previewed exactly 24 hours ago, Buffett’s Berkshire Hathaway said it will exercise warrants to swap its preferred Bank of America shares for 700 million shares of BAC common stock, making Buffett the largest shareholder, surpassing BlackRock, Vanguard and State Street . Buffett is also the top shareholder at Wells Fargo.

One of the recurring laments about the Fed's hiking cycle, most recently from Goldman, is that despite 2 rate hikes so far this year, financial conditions remain the loosest they have been in over two years.Whether that is due to the market being so drunk on the Fed's "punch bowl" it is unable to grasp the liquidity is being dragged away, or for some other unknown reason despite repeated warnings by FOMC members that stocks here are overvalued, markets simply refuse to concede that financial conditions should be tighter, in fact, as Goldman observed yesterday "so far, the Fed’s efforts to t

Three months ago, in the aftermath of the Fed's March rate hike we reported on what we thought at the time was a shocking development: instead of tightening, financial conditions eased. Dramatically. So much so, in fact, that Goldman chief economist Jan Hatzius wrote about it, saying that the "the Fed's 0.25% rate hike had the same effect as a 0.25% race cut!" and adding that "this was not the reaction the Fed wanted."

In short, Hatzius said that the Fed appeared to have lost control of the market.