Source: Elliot-today
Source: Elliot-today

Earlier this week, we considered the amount of laughter in Federal Open Market Committee meetings as a sign the Fed wasn't fully cognizant of the coming financial storm.

Today’s chart (via Elliot-today) adds another component to this, overlaying the Fed's laughter with the Case-Shiller residential real-estate price index. Perhaps the best way to examine the contrast is as a function of mass psychology: The Fed appears to have become complacent, apparently relaxed and satisfied with the way it handled the aftermath of the dot-com/technology/telecom bubble that burst in 2000.

Sure, there is some form-fitting here as the FOMC chart is adjusted 6 months to make the two correlate. Regardless, it is the sort of coincidence that would rarely be noticed in real time and is terribly significant in hindsight.

I wonder what the Fed is laughing about now …

To contact the author of this article: Barry Ritholtz at britholtz3@bloomberg.net.

To contact the editor responsible for this article: Alex Bruns at abruns@bloomberg.net.