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b'Fed is Willing to Tolerate Higher Inflation
\\nToday is the first Friday in May and that means we got the April Jobs Report released today, and before I actually get into the details of the jobs report, I want to talk about what happened with the Fed this week. I think that is the most significant news of the week.\\xa0 The Fed\'s statement on Wednesday and the comments from today are the real reasons we had the 300+ point rally in the Dow today, that\'s why we had the 400+point turnaround in the Dow on Thursday.\\xa0 It\'s all about the Fed and its willingness to tolerate higher inflation.
\\nFed Inserted the word "Symmetrical"
\\nSo we got the FOMC announcement on Wednesday after their 2-day meeting, and as expected, they left interest rates unchanged. The most significant part of the statement that accompanied the Fed\'s decision not to raise rates was inserting the word, "symmetrical" in their description of inflation.\\xa0 Up until Wednesday, the Fed was always worried that we didn\'t have enough inflation. The inflation rate was too low, and their goal was to get it up to their 2% level.
\\nWe Can Go Above 2% to the Same Extent We Were Below 2%
\\nNow the Fed is saying that they are at 2% and they expect the rate to actually go above 2%, and they\'re OK with it. What they mean by symmetrical is that inflation was below 2%, at least the way they measure it. It\'s probably always been well above it, but let\'s just look at the government statistics.\\xa0 Based on the government statistics we had inflation of 1.4, 1.5, 1.6; it was always below 2.\\xa0 So now what they\'re saying is we can have some symmetry on the upside, meaning, all right, we can have 2.5, because 2.5 and 1.5. the average is 2.
\\nThe Fed is Actually Lifting Their Inflation Target
\\nSo what the Fed is really saying is their goal is not to have 2% inflation, their goal is to have inflation that averages 2%.\\xa0 So if we\'ve had inflation of under 2% for all these years, we can have inflation of over2% by the same proportion for the same number of years and they we would have averaged 2% inflation for the entire time.\\xa0 So, in reality, what the Fed is really doing, and I have been saying this all along - for years and years - they are actually lifting their inflation target.
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