Two big questions have been front and center for Fed watchers in recent months...

The first is just how high rates could go before stimulus-addicted markets would falter. The second is whether our central bankers would bow to pressure once markets faltered and politicians began calling for the Fed to resume easy money policies.

Both questions now seem to have an answer.

They began to wonder in earnest if sky-high stock market valuations could be supported in an environment where Fed officials

promised to keep rates moving even higher for the foreseeable future.

The equity markets spent most of the last quarter of the year puking and retching.

The second question was answered by the change in posture of bankers at the Fed and the apparent activities of the Working Group on Financial Markets, aka the Plunge Protection team.

Central bank officials have been working to dismantle the powerful consensus they previously built around monetary policy for 2019. Up until just a few weeks ago, the prospect of ongoing bond sales and 3-4 rate hikes over the course of this year was widely considered likely.

Today, that consensus is gone.

When the selloff in the equity markets got serious, President Donald Trump and other administration officials ramped up the criticism of Fed Chair Jerome Powell and the central bank’s policy of tightening.

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