The magic wand

Yes we all know how he uses it to our great delight or distress, depending on what side of a trade we are.

His decisions erase conflicts off the map and food inflation is just an annoyance in his wordly quests.

Can we think that he doesn't have real power at the wheel, or on the contrary that he is omnipresent and we better don't fight the Fed?

My silly opinion lies more like he has power until he doesn't. Don't think linearly this kind of events.Part of his prestige resides in Benjamin Strong and Paul Volcker.

Why? Because they knew what they were talking about and they were proved right.

B. Strong headed the Fed Res Bank of New York and had the power equivalent today of B.Bernanke.He didn't like the idea of monetary tightening (there were no inflation to justify that kind of move) as a way to combat speculation in Wall Street in 1928.

The Fed started tightening money supply anyway in the spring of 1928.We know the consequences that followed to that movement.
Mr Strong knew what he was talking about but a non linear event alter the landscape, tuberculosis for him and death by Oct 1928.

About Mr Volcker we know how he tight monetary policy and break the back of inflation a few decades ago.
So in one case for omission of paying attention to someone who knew and in the second case for let it do what was best for the country (though painful) to someone who knew what he was talking about.

With that precedent the Chairman gets some credit (sorry about the pun) and fighting the Fed proved to be not rewarding lately.

There's lots of unintended results, but the bottom line is raise liquidity with semblance of order in the banks (from the depositors point of view) and people will speculate in the markets.

If playing that card the Fed always will be a force to reckon with.
But when push come to shove I side with non linear events any day and all their apparent power is just like playing a rol in a staged drama on a theater, that they can not control but just play their part.

What I do allows me to travel back and follow developments how they surfaced and at different moments what happened and the result on the general population.

And when we have like at that moment a cut around 42% of the salary in the still employed, events that massive are not avoided by some non linear event like the death of B Strong.

See? is non linear, is just bad luck that the right guy for the job died.Well looks like a random event but exist another kind of "linearity" that shows me no matter what happen to B. Strong hardship could not be avoided.

Ameliorated maybe? Honestly can not respond that, I can guess that instead of a 42% paycut could have been 29% but who knows?. What I know for sure is that the forces behind all this non linear events would have been present anyway causing equivalent hardship.

Making not possible in my humble point of view assume that a time of wild economic expansion was in store hadn't been for B Strong's death.

So sumarizing, yes the Fed holds power but just acting out forces that they can not control (maybe increase or diminish the end result). But is not posible for them to create that force, they can only create fiat.

Check the two greek people that die in May 2010 and next day the flash crash.Were this two people that powerful? Just the fuse? Is attributed to certain things the cause like and endogenous event because is more elegant to have a reason than to say that we haven't a fucking clue.

So for the quants mathematics are everything in the markets my view is more like using astrology in try cracking the codes, because how can you model with numbers only sheer panic or greed?.

Regarding the market I keep the same view since Jan 7 2011 nothing change much

http://anonymoustraders.blogspot.com/2011/01/eqypt-trip-part-two.html?showComment=1294388972928#c5010572766355837570


About NVDA in two days there's a small chance that a correction starts gaining momentum but the stronger one comes around feb 6 if the whole market helps coming down. Keep tight stops people.

Dan