Does Art Cashin Think Fed Policy Is Driven by the Market? “It’s Pretty Obvious”

Patient is going to mean very, very patient: UBS’ Art Cashin from CNBC.

via CNBC:

  • “It’s pretty obvious” the Federal Reserve is reacting “to the market’s reaction,” UBS’ Art Cashin says.
  • “There’s no question” there was a “Powell put” in the Fed’s interest rate outlook, he says.
  • The Dow Jones Industrial Average’s close above 25,000 on Wednesday “is giving everybody a sigh of relief,” he says.

The Federal Reserve is continuing to change its tune as officials react to the whims of the stock markets, veteran trader Art Cashin told CNBC on Wednesday.

“It’s pretty obvious,” he said on “Closing Bell.” “The fact that you look two or three meetings ago, it’s a completely different Fed and that’s … a reaction to the market’s reaction.

Cashin, the UBS director of floor operations, made his comments shortly after the Federal Open Market Committee decided to leave its benchmark interest rate target unchanged and said it would be “patient” in determining future rate increases.

In a press conference following the announcement, Fed Chair Jerome Powell made his strongest statement yet about the central bank changing its outlook on the hikes.

“The case for raising rates has weakened somewhat,” Powell said.

“There’s no question” the Fed chair was reacting to the market even though “he was shrinking away from [admitting] that,” Cashin said.

When asked during a Wednesday afternoon press conference about a so-called “Powell put,” Powell said this situation “calls for patience.”

The “put” is the notion that the central bank would take action to support stock prices in times of volatility, without explicitly saying it was doing so. A put is an option that pays off when a security’s price falls below a certain level.

“I think it does, and it’s just the stance of policy we think is appropriate,” he continued. “We see these uncertainties and we see a time when … we have the luxury of being able to wait and watch, and that’s what we’re planning to do. I think it’s the right thing.”

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