My favorite scene from the film Margin Call is when Jeremy Irons delivers a soliloquy that encapsulates the spirit of today’s Signal & Noise Filter:
“I am here for one reason and one reason alone: I am here to guess what the music might do a week, a month, a year from now. That’s it. Nothing more. And standing here tonight, I’m afraid I don’t hear a thing. Just…silence.”
“So. Now that we know the music has stopped, what can we do about it?”
The question is harder to answer with the Fed having gone silent too. Warsh won’t guide, so the reaction function has to be inferred from the data and front run.