Jeffrey Lacker of the Richmond Federal Reserve is considered very much a hawkish Fed president, but his comments on Wednesday are helping the stock market. After Ben Bernanke’s comments after the FOMC meeting last week, damage control has been done by many Fed presidents. Lacker still wants less quantitative easing, but his stance is that the Fed is nowhere close to shrinking its balance sheet.
In a Bloomberg Television interview he signaled that the United States still has a couple more years of very sluggish growth. One thing that stood out, which we also opined at the peak of the selling, is that Lacker said the market was way ahead of the Federal Reserve.
One thing that he also communicated is that the Federal Reserve is believes that gains in the labor market is more important than the raw GDP number. And on GDP, Lacker was not surprised by the drop this morning’s revision to only 1.8% growth rather than the 2.4% expected by both Bloomberg and Dow Jones.
While Mr. Lacker is supportive of an asset sale announcement, stocks and bonds are at the highest levels of the day. We currently have the 10-year Treasury note down at 5.54%, and stocks are surging as the S&P 500 is up 18 points at 1,606 with the DJIA up 174 points at 14,934.
Jeff Lacker is usually good at bashing the easing measures. Today’s move may not be a change of heart, but it should quell most of the fears that Ben Bernanke is about to yank the rug out of asset purchases and low rates.
No feral hogs today, but good enough.