Markets Brace As Fed Hawks Raise Stakes In Jackson Hole

Markets Brace As Fed Hawks Raise Stakes In Jackson Hole

If Jerome Powell intends to roll back the "mid-cycle adjustment" characterization of the July rate cut and its likely September sequel, his colleagues didn't do him any favors ahead of his hotly-anticipated remarks from Jackson Hole on Friday. Eric Rosengren on Monday said he wants to see concrete evidence that something's gone awry before he supports any rate cut, Esther George on Thursday reiterated that the July cut "wasn’t required", Patrick Harker said he only "reluctantly" backed last m
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11 thoughts on “Markets Brace As Fed Hawks Raise Stakes In Jackson Hole

  1. Yeah, all that market tumult, yet S&P is still over 2900. I see hawkishness tomorrow. Any additional dovishness would come at the Sept press conf and only after a 10+% dip in risk assets.

  2. H-Man, the world is imploding on rate decreases. Forget the US, the fed will capitulate to the world, and will cut rates to accommodate those pressures . The question is what happens when the US hits the zero rate line.

  3. I think the Fed won’t let Trump or the bond market tell it what to do. I sense that many market participants feel sickened by all the bullying of the Fed by the markets and Trump, a sort of disgust with where we have sunk to, the insatiable desire for more sugar without a thought or care of where this leads the market in the future, a sense of complete chaos. And here is the paradox, it may be that if Powell pushes back and says, “NO, you can’t have any more candy, go to bed!” we may paradoxically get a rally, as some sense of order and thoughtfulness is restored. We got a hint of that with the rally back after the sell off caused by the two hawkish Fed speeches this morning. NASDAQ did get a daily bearish engulfing candle, but both the Dow and S&P did not. So tomorrow we may get weakness at the open and then when Powell speaks at ten, perhaps an initial selling wave that eventually rallies back and we get bullish engulfing candles on the daily for all the indices.

  4. re: “protect growth and resurrect inflation”

    Let’s be clear, the Fed has no problems with inflation and I don’t recall that growth is a primary objective, i.e., I think their mandate is is to provide stability. Hence, it’s not the job of the Fed to game markets and make sure that everyone around the globe that speculates in markets has guaranteed bets. In this specific case with trump being a maniac, it’s the Fed’s job to provide measures of stability, which may include allowing the market to crash short term in order for the Fed to demonstrate that they don’t give a shit what the markets or trump are crying about. If anything, once the Fed lays that groundwork and initiates a fight, trump will be boxed in and contained, looking like a total idiot –, and then the market will come around with investors buying the dip. This isn’t rocket science!

  5. George, Kaplan, Rosengrin, and Harker (non-voting) have Powell’s back, and even Bullard realized he got too far out over his skies. Powell will do fine and tomorrow will be a non-event. Have a great weekend!

    1. I forgot one thing. The Amazon is on fire. Seriously, none of us will be watching every market tick if we let that fascist Bolsinaro destroy one of the biggest carbon sinks on the planet.

      1. So is Greenland, Alaska, and Siberia. So not only do we lose oxygen production in the Amazon, but we have glaciers melting into the oceans and melting permafrost releasing methane into the atmosphere.

  6. On the issue of inflation — is anyone here somewhat aware of what Nielsen Homescan is? If not, it’s the greatest joke of all time and an issue that is at the core of Fed inflation (bullshit).

    It’s a very fun inflation topic which is very much under the radar:

    Many of the price differences may be driven by the way Nielsen imputes prices: when available, Nielsen uses store-level prices instead of the actual price paid by the household. There are also differences by household type in the tendency to make mistakes that are correlated with demographic variables. However, the fraction of variance explained by the documented recording errors is in line with other research data sets for which cross-validation studies have been conducted.

    https://www.ers.usda.gov/publications/pub-details/?pubid=46114

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