I had the good fortune of spending some time in a waiting room this morning where today’s Wall Street Journal was available for reading… and since I don’t subscribe to the WSJ I will have to paraphrase what I read in one of the cover stories…

Stocks and bonds rallied yesterday on the comments from Federal Reserve Governor Richard Fisher who said the economy is strong despite a slowing housing market and right now inflation is the biggest risk. […] The comments led to expectations that the Fed is done raising rates.

Am I wrong, or am I the only person who read “the economy is strong” and “inflation is the biggest risk” as preparing the way for another rate hike? When the economy is strong, that means it should be able to handle the impact of more hikes without too much trouble. If inflation is a worry, then the Fed could/should raise rates to stop it from getting out of control.

Am I missing something here? It’s just like with the last 7 FOMC rate hikes, everyone was convinced that the Fed was going to pause despite all the messages to the contrary. The market cheerleaders kept singing the same song, almost verbatim despite being wrong 6 times in a row…

[Note that I’m not saying the Fed should raise rates, but rather the reaction to Fisher’s comments was unusual…]