THEME: FED HIGH FIVE?
Here is an interesting clip from an article today:

In their study, Bernanke and his co-authors provide hard evidence that the Fed's ability to steer the economy often depends far more on what it says than on what it does with interest rates. Moreover, they say, the Fed's "considerable-period" maneuvers had an even bigger effect on longer-term interest rates than previous statements of the FOMC.

"Shaping investor expectations through communication does appear to be a viable strategy," Bernanke and his co-authors, Vincent Reinhart and Brian Sack, concluded.

Seems that ole' Ben Bernanke's star is rising in the Fed. He was credited with the dramatic shift in the Fed's policy in 2002-2003 to fight DEFLATION. Now, he is being credited with this new clever strategy of using phrases like "considerable period" to nudge the markets up without actually giving them any real changes in interest rates.

I think the Fed is suffering from a bit of hubris here. It makes me really nervous about 2005.