"You don't go from Wild Turkey to Cold Turkey" very quickly. That's an old quote of Herb Kelleher, founder of Southwest Airlines (LUV), who passed away this week. Former Dallas Fed head Dick Fisher mentioned that quote today.

He was reflecting on Fed monetary policy and former Dallas Fed President Kelleher (the LUV Chairman was also at that post during the 'Epic Debacle' we had projected in 2007-'08); and was also a fan of Wild Turkey Kentucky Bourbon.

Of course Dick Fisher was sharing the metaphor as relates to weaning off a form of addiction, as he lamented Mr. Kelleher's explanation years ago as to why Chairman Bernanke's Fed (on which Fisher served) 'failed' to lighten-up on super-easy 'emergency' monetary stimulus after the 'Crisis' ebbed.  

To me this comment, and earlier today Jim Grant (who 'is' a bond guy) about the 'commercialization' of ultra-low-cost money, confirm my assertion that no problem exists with regard to how Jerome Powell chairs the Fed, but rather the issue was how Bernanke overstayed the 'emergency low rates' and QE.

Earlier Friday (and yesterday) I suspected Powell would 'talk nice' but not at all change actual policy thinking at Friday's panel discussion. So I found the opinion Dick Fisher shared (since he was on the FOMC, not me or Grant) to be very important. That was that other than one or two palliative words, he saw 'no change or movement at all' in Fed monetary policy.  

So we have Dick Fisher and Jim Grant (these guys are in the bond arena so again it meant something to me, as I was drawing common sense outlooks as regard rolling-off the tremendous amount of Fed Balance Sheet paper of course now, and presumably expanding this year if they can't roll it off. Now you have these gentlemen saying I've got this right about the heart of issues surrounding rates. That being that it's a 'Supply' issue primarily and not very much related to anything inflationary or to domestic economic strength.

And of course the Jobs number ignited the Friday response initially, with far stronger-than-consensus numbers although that doesn't automatically mean the economy's cooking again (and that data was a bit stale from Dec. 12); at the same time of course we're pleased to see more people working or even emerging from the shadows of the disengaged workforce that's out there.

Now previously the market tried to link Fed Quantitative Tightening to some misjudgment about that economic vibrancy; so there we concurred that Mr. Powell could have had a different 'tone' (it was just off-the-cuff) at the FOMC News Conference. He clarified that in talks; and again today. That's context they are all debating. There was not a single word that suggests divergence from the Fed's approach (and needs given 'Supply' concerns) or the market continuing to relate this more to short-term rates or the economy (the Chair sort of has to do that because of his mandate which isn't as global as what's become the modern Treasury market; which he has to take-into account).

In sum: now we await the new 'Trade Talks' with China; and presuming the outcome is fine-tuned enough to revive growth expectations (there and here by the way) you 'could' extend this overall move. It's not a flawless technical pattern; given the denial of a full secondary test of the prior low due to jobs news and 'overly euphoric' interpretation of Chairman Powell's remarks.  

'Wild Turkey to Cold Turkey' reflects simply not being hawish or dovish; but rather knowing what 'has to be done', but having a gradual withdrawal from inebriation. That was my 2015-'16 'taking the punch-bowl away' viewpoint of a market that was struggling then, as Wall Street seemed so distraught 'free money' was basically going away. It's also why we needed 'Trump's win' to thrust the market to the Moon; and why we need a China deal today to get a modicum of additional time too.  

Meanwhile what's different is that the Fed is on autopilot still; and flexible is just a word to calm markets. Investors (or money managers) who assume it is a backing-off and play markets that way, will possibly get crushed in time. The Fed is just saying they'll jump-in as needed if there is 'duress'. And I did take note of Chairman Powell off-the-cuff quip today that he's love another year like 2016. Yes; they were able to wind-down late QE, initiate early QT policies, and the markets were shaky but not plunging. That's a hint of what he wants. Less changed than meets the eye; and the rally is suspicious. 

This Fed Chair does come from 'Capital Markets' background, and he read from notes this time; and conveyed just the proper policy, without using the term 'autopilot' for the unwinding. And it all relates to 'judging' where the markets are (data dependency) conditional to how things go. Well that's actually what he said before; and it's not news but Wall Street needed it to be today; so it was.  

For now the S&P run-up retraced the prior session and finished right at the 2530 area, which was essentially the S&P's double-bottom noted low back in February 2018. That's the lower of two resistance areas we anticipated with the post-Christmas year-end relief rally; and the next is the low 2600's, which was the 'congestion zone' preceding December's 'selling climax'.