Eighth Inning Stretch

Dallas Fed President Richard Fisher is actually very straight forward and funny which is odd for a Federal Reserve President.  That's why his comments carry some weight with me - having just become president of the Dallas Fed last year, he's too new to understand the de rigueur of Fedspeak.  I'm sure he'll get a nice talking to by Greenspan after his appearance on CNBC to make sure his comments aren't nearly as clear in the future...From MSNBC version of the interview...

“I think we’ve room to tighten a little bit further,” Fisher said, but, using a baseball analogy, added that the U.S. central bank is in the eighth inning of its tightening cycle and entering the ninth, and usually final, inning this month.  He said interest rates had to get to the point where “we are neither stimulating inflation or discouraging growth.  We are not quite there yet. We are getting closer, and as to when we get there, stay tuned,” he said.

Always keep in mind what happened the last time the Fed was in the "eighth inning" of a tightening cycle.  The Fed tightened for the last time in Feb of 1995 but the market had already started off to the races in Dec 1994 in anticipation of the end of the tightening cycle.   While I'm aware that history doesn't repeat exactly, I think that the 1994 analogy works well in a directional sense. 

Chart Courtesy Baseline

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