The Fed That Didn't Bark

The Fed That Didn’t Bark by Robert R. Johnson, PhD, CFA, CAIA, President and CEO, The American College of Financial Services

In Sir Arthur Conan Doyle’s short story Silver Blaze, Sherlock Holmes concludes that since a guard dog didn’t bark the dog was friendly with the intruder. Last week the Fed didn’t bark on raising interest rates because they’re friendly with the financial markets – perhaps too friendly.

After this inaction by the Fed, the equity markets seem to be very confused and appear to be trending downward. Many pundits were surprised that the stock market has not responded positively to the decision not to raise rates.

I believe that market participants are suffering from “Fed fatigue.” Interest rates are surely going to...