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For Fed Chair Yellen, silence is calculated

When Fed Chair Janet Yellen steps to the podium for her post-meeting conference on Thursday, it will amount to the first words from the world's most powerful financial leader in 63 days.

Over the period of extended silence—including a notable no-show by the chair at a Fed gathering in Jackson Hole, Wyoming—investors have digested (or, rather, indigested) escalating economic weakness in China, a global downdraft in commodity prices and violent stock market swings.

And that is not to mention persistent and deep-seated doubt over what the Fed will do on Thursday despite a commitment to transparency from the central bank.

Has Yellen abdicated leadership or is she exercising a new form of it?

What's clear is that the silence is calculated. If Yellen had wanted to send a clear signal, she would have no trouble making her views known. It is also clear is that she presides over a committee that is divided on the issue of raising rates. After a series of ferocious market swings, New York Fed President Bill Dudley said he found the case for a September rate hike "less compelling." Several days later, Fed Vice Chairman Stanley Fischer, in a CNBC interview, suggested in no uncertain times that September was very much in play.

And Yellen said nothing.

Letting deputies duke it out is textbook leadership. It gives the chair flexibility. But eventually, the chair has to step in to break the tie. The problem is that some see Yellen's silence as sending a message. The failure of Yellen to weigh in, observers say, points to no imminent rate hike since she would have prepared markets for the increase.

It's a decent argument, but the question is whether the Fed could have gotten to the same place with less volatility, without forcing investors to divine subtext from silence.

There are two other possibilities: One is that Yellen wants the market guessing as we go into meeting and thinks the uncertainty creates a two-way trade that could keep a lid on financial bubbles. The second is that she really doesn't know what to do. That would make this as live a meeting as they come, where there is an equal chance of either result. Yellen will let the committee decide. Had she found value in steering either her committee or the markets, she would have done so. Seeing none, Yellen decided that there was no gain in speaking, that the best value she could provide as chair was her blaring silence.

And so, Yellen said nothing.