(Bloomberg View) — The Federal Reserve’s liftoff day is here, and truth be told, I find almost all of the commentary on the subject to be overwrought speculation and uninformative blather. If that sounds harsh, it is. But at least it’s consistent with my other writings on this and related subjects.
You see, much of what you believe to be important isn’t important at all. Most of the media focuses on items that seem critical day-to-day, but actually amount to little more than interesting, amusing, gossipy filler.
Regardless of the import of the vast majority of what you have read about the Fed — or heard or mentioned or discussed or told your clients — most of this noise is already reflected in prices. Although many are discussing what might happen, I am telling you it already has happened.
The most regular reminder that there is too much focus on all the wrong things is the monthly employment situation report. As we have discussed many times, this is very noisy data subject to revisions and the longer trend matters much more than any single report. I think of the Fed in a similar way.
What Your Peers Are Reading
Today is different in that for the past seven years, every single data point — and that is all each Fed meeting is, a single data point about changes in interest rates — in this series has been a big fat “nothing done.” This makes today feel more momentous than it is.
In reality, an increase is pretty much a done deal, with fed fund futures indicating that the likelihood of a raise approaches 80 percent.
This isn’t me being a curmudgeon, but rather being consistent with our other admonitions that most people spend a lot of time and mental energy worrying about the wrong things. They fear terrorism when they are more likely to die of high cholesterol; they are concerned about market crashes when costs, excessive trading and taxes do more harm to their returns.
And now, they’re worried about a minimal rate increase, when history shows that it shouldn’t be feared. Raising rates from zero with inflation modest, unemployment cut in half and the financial crisis seven years in the past is a positive, not a negative.