FOMC Dissents

I can always count on Merrill’s economic team, headed by David Rosenberg, for an interesting data tidbit
or other worthwhile factoid.

Today was no different. Looking at the likelihood of a dissent in todays FOMC vote, they noted: Consider this about FED dissents:

Since the start of Bernanke’s tenure, he has faced dissents at 53% of the FOMC meetings he has chaired. While this may seem like a lot, it is actually quite close to the 56% dissent ratio faced by former Chairman Greenspan in his first five years on the job. Indeed, dissents are normal (Chart 1).

There is one key difference however. Chairman Greenspan frequently faced dissents from Governors with 21 of the 35 dissenting votes, or 60%, during those five years coming from this group (Chart 2). Chairman Bernanke has not had a Governor vote against him yet indicating that he has a more secure voting “bloc” than Greenspan did when he first started. Only if we saw a defection of a Governor would we begin to worry that the dissents will begin to influence policy.

Good stuff . . .  charts are below in order of mention above.

Its worth noting that Dallas Fed President Richard Fisher wanted a rate hike, and the market liked the rest of the noise.


New Fed Chairs Face Frequent Dissents

Source: Federal Reserve, Merrill Lynch

Greenspan Govs led dissenting votes


Source: Federal Reserve, Merrill Lynch

Dissenting opinion: no dissent more likely than three
Drew T. Matus
Merrill Lynch 05 August 2008

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What's been said:

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  1. HCF commented on Aug 5

    It’s interesting how Fisher was the only dissent this time, the Fed didn’t change rates one lick, yet everyone is commenting on CNBC how the Fed is soooooo hawkish right now. I get the feeling that the perma-bulls are too afraid to look behind the screen to see the man pulling the strings. How is today’s decision so bullish?


  2. Stuart commented on Aug 5

    As said, the Fed did nothing. Dissent or otherwise. Perhaps a tad tinfoil, but wouldn’t be surprised if that dissension is merely a “plant”.

    “05 AUGUST 2008

    The Message of the Markets

    No Chart updates tonight because of personal commitments.

    Today’s market action looks like a major Wall Street push to break the traders who were playing the long oil-long metals – short dollar-short financials.

    The volumes are just not there to justify this run up and the Fed did not do anything. However, the spin is running hard and deep from the ‘chief strategists’ and Wall Street wants to get the market up and offload more shares to mom and pop.

    We will be very surprised if the market does not sell off tomorrow, but we have an open mind and will start considering the notion of government intervention which could sustain a prolonged ‘reflation rally.’

    But for now this just looks like the Wall Street wiseguys peeking at the other players cards from their superior seating vantage points as insiders and pressing the bets against the prevailing trades on the fundamentals. If so, the prior trends should reassert themselves. If not, then we might be in a new ballgame.

    We will WAIT for a sign that this is the case, although we did put on a few shorts into the close. There is not edge in jumping in front of this in case it is something more profound than just the usual Wall Street shenanigans.

    hattip: crossroadscafe.

  3. VennData commented on Aug 5

    To semi-paraphrase Ben Graham: the Fed is not a weighing mechanism, but a voting mechanism. …And we know how that’s turned out for us lately (which see – the Tyrannosaurus Rex ‘toon)

  4. Mike commented on Aug 5

    The whole thing is orchestrated. To think otherwise is just silly.

  5. Mike commented on Aug 5

    The whole thing is orchestrated. To think otherwise is just silly.

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