With apologies to Bob Dylan, its clear that the casino does believe that the Fed is the monetary equivalent of heaven’s front door. Ever since QE officially ended last October, the market has been chop, chop, choppin’ higher on the slightest hint that 78 months of free carry trade funding may not end after all. This latest run-up makes the ninth time since the original Bullard rip seven months ago.

^SPX data by YCharts

That the Fed and other central banks have unleashed the speculative furies is an unassailable and baleful reality. Yet  this morning instant 40-point Dow drop in response to the posting of “incoming” housing data that looked slightly optimistic at the headline level was unusually absurd. Indeed, that this short-lived (@ 45 minutes) “housing is back” story spooked the market with fear that the Fed might finally cut off the juice——now that’s  a canary in the trading pits that worth noting.

What is going on here plain and simple is a one-sided game of chicken. The robo-traders and hedge fund buccaneers on Wall Street press the market higher on virtually no volume or conviction whenever macro-economic weakness presents itself, virtually daring the Fed to maintain is ultra-accommodative stance still longer.

At the same time, the utterly clueless posse of would be monetary central planners domiciled in the Eccles Building invent one new pretext after another to justify delay, which only encourages the gamblers to press their advantage still harder. We have now reached the point where the casino is literally calling the Fed’s bluff, but these academic scribblers and power-drunk apparatchiks don’t even seem to know it.

This condition is especially ironic because the school marm who currently presides claims to be engaging in an unprecedented level of “transparency” with regard to the Fed’s intentions. In fact, however, the Fed’s communications regarding the sign posts it is watching are not simply transparent; they are essential a content-free blank slate.