Fed Governor Lisa Cook announced she's prepared to act on rate hikes to address inflation. She made this announcement after voting with eight other people to do absolutely nothing.
The vote was 9-3 to keep rates between 3.5% and 3.75%. Cook sided with the overwhelming majority that decided the thing she's now prepared to do should not be done. She's prepared though. Very prepared. Just not prepared enough to actually vote for it.
This is like a firefighter standing outside a burning building telling reporters he's totally prepared to spray water if things get worse. The building is actively on fire. He's just not prepared right now. He's prepared for later. When he's more prepared.
Retail traders heard this and immediately began scanning their charts for the "Fed Governor Says Words" indicator. It sits right between the Hindenburg Omen and the astrological moon phase oscillator in terms of predictive value. The indicator has a 50% success rate, which makes it the most accurate tool they own.
Cook's statement is technically true. She is prepared to act. She's a voting member of the Federal Reserve. Being prepared to vote on interest rates is the baseline requirement of her job description. It's like a dentist announcing she's prepared to look at teeth if they get too cavity-ridden. We assumed that was already covered.
The three people who actually voted for a hike presumably went home and stared at their reflections wondering what it's like to have conviction. Cook went home and practiced being prepared in front of a mirror.
Somewhere a retail trader is drawing a trendline connecting Cook's statement to the last time a Fed governor said they were prepared to do something, trying to find alpha in the frequency of prepared-ness. He'll lose money on it, but at least he'll feel prepared.
Photo by History in HD on Unsplash
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