‘Plain English’ People, Do You Speak It?!
That’s not to say there’s something inherently desirable about having PhDs running the show and it’s certainly not to suggest that economics is a “hard†science (it’s not, and I should know). But it is to say that economists have been running this show for a long time now and I’m not sure you want a non-economist in the driver’s seat when you’re trying to mark a smooth transition away from a $15 trillion global experiment conducted a
Sorry, I will have to demur Most of your post.
Powell is a heck of a lot better than Greenspan Fog..
But then I’m a little giddy on today’s TZA position. .
No need to apologize, but it just is what it is. His approach is creating volatility, at least in equities and credit. There’s no question about it. Whether that’s deliberate or not is another question and the fact that rates vol has remained suppressed may be a testament to effective normalization, but there is no arguing with what’s on your screen. There’s also no arguing that he came across as stammering and not sure-footed in the presser. Again, it just is what it is. He’s no Draghi. Take a look at market reaction last week to Draghi ending QE versus today’s hike. That’s really all you need to know.
What Draghi is currently doing doesn’t seem to me to be particularly difficult. If Powell were to come out and say “No hikes until at least through the summer of 2020 and we are pausing the liquidation of the balance sheet” what would the reaction be? The markets would explode higher. A monkey could do what Draghi, Bernanke and Yellen accomplished; holding rates at 0 and flooding the markets with liquidity. Getting into a trade is the easy part, getting out is where it gets difficult.
lol. yeah, ok. it’s not difficult to unwind a $4.5 trillion buying program that spans multiple countries, multiple sovereigns, corporate credit, LTROs and NIRP amid a fracturing currency union where all the members run disparate fiscal policies.
that is quite literally one of the most challenging dynamics to navigate in the history of economics/finance.
Exactly my point. What Powell is doing is difficult; unwinding. How can you be so sure it his approach that is creating the volatility and not the act of the unwind itself? Draghi hasn’t unwound anything of consequence. Real rates are what negative 1.5% in Europe? Come on.
“You can’t argue with what’s on your screen.” I think some dip buyers still are doing just that, and that shows how momentum can be perverse both in memory and when the steam roller is about to knick that finger grabbing a dime.
Stepping back and taking a broader view… It’s pretty pathetic that: (1) Japan and Europe couldn’t grow their way out of a paper bag despite YEARS of low/zero/negative interest rates, and (2) the mere specter of rates going into the low- to mid-3%’s is enough to send our risk assets spiraling lower. Let’s shake out the rugs and get ourselves back something more closely resembling REALITY… By the way, happy holidays!
It’s not that it is a problem to speak plain English when it comes to economics, your real problem is that he speaks plain English to a pack of entitled, freeloading brats. The same brats who brought the economy to a screeching fucking halt in 08 . That’s right, the speculator class that is doing its best to rob Main Street to line their own pockets to this day. Something for nothing; always winds up bad for most.
Have you ever looked up “regular guy” Jay’s net worth? You should give that a shot and then compare it to Janet Yellen’s net worth and tell me who is more “Main Street”.
Also, look up Powell’s CV and compare it to Yellen’s CV. Again, tell me who is more “Main Street”.
Tim Knight gave a good analogy for what’s going on in the markets. Also…for those that are bears…Tim Knight is the bearish guy I know…
https://ontt.tv/2LqgOxy?utm_campaign=tt-ios&utm_medium=sms&utm_source=social-share
QE was morphine. QT is chemo. It sucks. It may suck for longer than you wish and you may still die.
All those “Brock Turners” that lobbied for the dereg that gave us the GFC should have gone to jail with Lehman. But those asshats got a bonus, a Congress and a POS and a mountain of lobby jobs, and cheap money to sell at premium. I am tired of people blaming the fed for shit the fiscal and dereg racoons/mafia setup.
The GFC piper has to be paid. The mega rich insiders want the plebs to pay as always. Blaming Powell because your calls expired otm is just lazy populism. Nuff sed.
Thanks, H. My life is literally richer reading your snark and insight. Merry fucking Christmas! Lol. I wish I could pay for an annual sub for your writing. Worth every penny.
QT and increased supply and 10yr sub 2.80. Being absorbed pretty well. Stocks are priced at the margin so sellers (due to risk managers etc) sell and buyers sit on their hands because they are mostly full up. Kind of like CDS at 50bps on GE, you buy that all day but the fool sells it. Then when the seller tries to cover it is at 400 before you know it. Did this increase and meeting really change things? Not really, we think Powell is Bernanke and is going to break it but will he? Labor still tight but wage growth is still ok, energy costs helping on pressures, CFOs will be more cautious on spending helping apply the brakes, rates helping housing, etc. other than corp debt (which is not an immediate economic risk) and govt debt (which this unrest is helping) there aren’t too many real excesses. Bank capital is fine. And this unrest probably leads to the end of the trade war. Stocks pricing in a 20% decline in earnings for the SP500. If i am running a pension fund would I rather own stocks at 5% FCF yields or bonds at 2.75? It was fashionable to be bullish in early 2018 and for some in Sept of 2018 and now it is fashionable to be bearish. Being rational can cause underperformance in the short run but if Powell isn’t totally clueless I think there are opportunities out there. For the first time in a while some quality names look attractively priced to me. I feel like I am alone on an island or just maybe I am about to be shipwrecked. I’ll know in 6 months……….. Be smart, do your homework, watch your risk and good luck trading and investing.
I don’t know why Powell is getting all the flack as he may have influence on the other voting members, but finally it’s a majority decision. As for plain speaking, at last he’s used the term Emergency Reserve Fund instead of the innocuous Fed Balance Sheet. As someone from PIMCO stated on CNBC last night, he’s telling Wall Street to grow up and stop relying cheap money handouts from the Fed.
In 2008 while running a hedge fund I lost 8%. I was right about what was going to unfold but I still managed to lose money. The secret to my “success”? I thought the FED and other policy makers would see what I saw and then adjust accordingly. They did not. Yesterday Powell just convinced me they (or at least he) did not learn from the mistakes leading up to and then during the GFC. Do they not understand what bringing on a recession would do to the Federal Fisc? We are talking $2T deficits. Try calming markets when that becomes reality. Next year the tax cuts grandfather, housing will still be constrained by higher rates, autos are at best flat, global economies are stagnate, Washington is in disarray, inventory build is increasing and capital spending in the oil patch is about to go negative. Exactly how do we get more than 1 1/2% growth? The FED succeeds again.