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Wabbit Season!

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There was one?

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Total chaos -- no mass confusion
Rhymes so hypnotizing known to cause an illusion
Like a magician who draws a rabbit out a hat, son
I'm drawin' more, like a 44-Magnum


(EPMD)

Good morning as we ready our troop for the new bird coup. We're animal friendly in these parts (sans buckshot) and welcome critters of all shapes and sizes. We certainly don't discriminate--not between breeds, needs or political affiliation--and believe that fiscal literacy is an equal opportunity agenda. Imagine our surprise when we cast our eyes to yesterday's sky to find a strange bird of pray. It looked like a hawk...but not really. It flew like a dove...but not so much. And to top it off, confusing even the seasoned observer, this particular critter was actually chirping out of both sides of his mouth!

Welcome to the the new and improved FOMC, where communication and transparency trade at a premium. The mascot of choice for this new regime? The vaunted DoveHawk, which simultaneously seethed that "inflation is somewhat higher than desirable," "further policy firming may be needed," "rates seemed close to where they needed to be" and "core inflation should remain contained over time." If a picture is worth a thousand words, this newly painted portrait would make Tommy DeVito's mother blush!

I'm all for honesty and understand Big Ben's dilemma when he offers that the future rate path can't be "prejudged." Unfortunately, it takes many months for hikes to hither into the marketplace and the tape itself is a discounting mechanism that foretells the path of the economy. So when our central bank is twisted in a knot on the slope of the tightrope--but seemingly agrees that the inverted yield curve simply won't matter--you'll forgive us for our inquisitive looks as we read between the lines. Indeed, as I often say to my friend John Succo, this is getting interesting and interestinger.

The great debate these days is once again focused on the state of our 'flation. Are we seeing deflation, as evidenced by the pricing pressures procured by the digital age consumer? Are we seeing inflation, as viewed through the lens of healthcare, education and energy? Or are we seeing both merge into stagflationary pressures, masked only by the elasticity of debt and less than accurate reporting by the Bureau of Labor Statistics? It's a valid conundrum, alright, and in a finance based economy leveraged to equity and home prices, the stakes have never been higher.

This is not a call to arms or a cause for panic. It's simply an assertion that capital preservation and conscious illumination will serve us in good stead. The only thing clear is that the landscape will remain unclear and open to interpretation. Thus, the collective psychology will dictate our journey as investors toggle with promises of a steady hand vs. the growing risk for future generations. The market may not be as fun as it once was but the ramifications of our financial choices is serious stuff indeed. That's why you're reading these vibes and, alas, that's why the critters come to play each day.

Good luck.


R.P.
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