We have lived through two booms in household net worth in the last 15 years, and if the Fed wants to engineer another one, they should be taken at face value.
Two interesting wrinkles to the latest version of these tests: banks get a one-time do over if the Fed rejects their capital plan and a key measure of risk-weighted assets has gotten more stringent.
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If the plan fails to pass, the Fed could conceivably create one itself for mortgage assets, argues Michael Feroli, economist at JPMorgan Chase.
Of course, there are no ideas on how to create those jobs and even if there were ideas that would work, the Fed would not be the one creating them.
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In some cases, it can use one mobile device to relay power to another, keeping everything fed even if the main power hub is tied up.
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As it becomes more of a guessing game to see what the Fed will do next, volatility rises, and if there's one thing traders love, it's volatility.
Put another way, a poor quality bank bond that no one wants because the bank is in trouble is suddenly high quality debt if the Fed is prepared to swap it for a Treasury bond.
Walk by the Latter-day Saints church on the Upper East Side of New York, and you will see only images of Jesus and scenes from the Gospels, even if the Mormon Jesus looks more corn-fed and burly than the gaunt, ascetic one in the Protestant church around the corner.
That suggests QE would be the favoured option, particularly if the Fed can wait until the election campaign is over and act without being accused of helping one candidate or another.
Having said that, this will likely not mean much for Fed policy as they will need to see more than one month of strong numbers and if it is sustained.
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