One Fed official may have saved market from another rout. Why John Williams’ remarks matter so much

CNBC.com ^ | Fri, Nov 21 202511:01 AM EST Updated 24 Min Ago | Jeff Cox

[E. Pluribus Unum]

Key Points

• Messages that come out of the top echelon at the Fed are measured carefully, calibrated between delivering clear ideas about policy without causing undue reaction in financial markets.
• That’s why a speech Friday from the current New York Fed leader, John Williams, mattered so much to markets.
• Ongoing concerns about AI tempered a stock market rally, but traders flipped positions, placing bets on a December rate cut.

Communication at the Federal Reserve, particularly at the highest levels, rarely happens by accident.

Messages that come out of the top echelon, particularly the chair, vice chair and the powerful New York Fed president, are measured carefully, calibrated between delivering clear ideas about policy without causing undue reaction in financial markets.

That’s why a speech Friday from the current New York Fed leader, John Williams, mattered so much to markets. With his position comes membership in the Fed’s leadership troika, a group that also includes Chair Jerome Powell and Vice Chair Philip Jefferson.

So when Williams gave a nod to the likelihood of a “further adjustment in the near term” for interest rates, investors took it as a message from on high that the leadership is inclined for at least another rate cut sometime soon, likely at the December meeting of the Federal Open Market Committee.

“There is some ambiguity in the phrase ‘near term’ – but its most obvious reading is at the next meeting,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a client note.

“And while it is possible that Williams was offering a personal view, signals from the other members of the Fed leadership troika (vice-chairman, NY Fed president) on key live policy issues are almost always approved by the chair and it would be professional malpractice for him to deliver...”

[montag813]

Saved, my ass. Will probably be red again by day’s end.

[ridesthemiles]

“FURTHER ADJUSTMENT” IS VERY AMBIGUOUS

[pissant]

No chance

[BereanBrain]

You cannot time the market.

Only the big guys can.

So stay in for the long term, don’t sweat a 30% haircut.

[Capn Hayek]

Anybody sweating daily - even weekly or monthly - churns is a sucker likely to get fleeced.

There are always and have always been doomers who insist the next mother of all crashes is just around the corner. The old cliche about the doomer “correctly predicting 10 of the last 2 crashes” is evergreen.

Yes, we have bubbles that will pop. Yes, another bear is coming. Yes, even another crash is coming.

But over the long haul? The people who get screwed are the chicken littles who inevitably panic and cash out low.

I go back to 1987... so I’ve seen that... and the dotcom burst.... and 2008.... and covid.... and guess what?

Over 40 years? Trust in capitalism. It always wins in the end. It’s frothy, it has its ups and downs.

By all means, you do you. But history is littered with doomers and marxists and anti-capitalists who ended up sad and poor in their old age.