Fisher Blasts 'Feral Hogs'

Today’s FT reported on an interview with Richard Fisher (FRB-Dallas), who is a non-voting member of the FOMC this year. He said that the Fed had anticipated a significant market reaction to last week’s announcement that it was likely to phase out QE by mid-2014 if the unemployment rate continued to fall toward 7.0% by then and inflation remained subdued. Fisher, a former hedge fund manager, warned traders not to test the Fed’s resolve:

I don’t think anyone can break the Fed….But I do believe that big money does organise itself somewhat like feral hogs. If they detect a weakness or a bad scent, they’ll go after it.

He acknowledged that the Fed is monitoring market movements. However, he suggested that the Fed has become concerned about bubbles that have developed in a number of financial markets, mentioning EMs, REITs, and junk bonds specifically. He said, “I wasn’t alone in drawing attention to these factors” at the last meeting.

Mixing metaphors, he tempered his hawkishness with a dovish comment: “I don’t want to go from Wild Turkey to ‘cold turkey’ overnight.”