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Powell Emphasizes Global Slowdown, Geopolitical Turmoil In Crucial Jackson Hole Speech
For Jerome Powell, Beijing picked a rather inopportune time to unveil retaliatory tariffs against $75 billion in US goods, some of which will go into effect on September 1.
Fed officials spent the week sending a somewhat hawkish message, prompting traders to reconsider whether policymakers are prepared to bow to the bond market and to Donald Trump by abandoning the "mid-cycle adjustment" characterization of the July rate cut and its likely September sequel.
That potentially set up Powell to de
What was this mess? How are supposed to know if the Fed will cut 50 bps this September with dovish guidance or cut 50 bps with a dovish pivot?
Anyone think that China waited until the Jackson Hole meeting to announce their retaliatory measures…lol…sowing discord between Trump, the Fed and Wall St.
OMG! Seriously? “I don’t know, can’t say, I don’t like it but I guess things happen that way.” (Apologies to the late Johnny Cash)
I anticipate Trump will Twitter like a bird over this one…. Powell seems to want to throw Monetary Policy deeper into the Public forum probably to defray the criticism that he as well as the Fed has shared…. The big question becomes ….”who if anyone will feed the baby in the night “
Harvey, it think that was the goal.
Powell was, I think, trying to give as little hard rates guidance as possible while sending some messages.
Here’s what I read:
– no repeat mid-cycle adjustment: modestly dovish.
– no reference to the next rate cut: modestly hawkish.
– no reference to independence, but referred to elected representatives “in Congress”: obvious read here in combination with the public review comment.
– will not react to trade “policy uncertainty” but will consider trade “developments”: sounds like “we won’t act in response to imposed or threatened tariffs, we will wait and evaluate the consequences of tariffs”.
– expects “lengthy periods” when fed funds rate is “pinned near zero”: implies Yellen’s normalization is truly over, 2.5% ish is the new upper bound.
– said will do a ‘public” review of its strategy and considering expanding its toolkit for this ZLB environment: suggests less reticence, seeking alternative to QE, some reluctance to take fed funds rate near zero with current tools.
Spot on, again, jyl.
Wake up and smell the trump game plan, which is, say insane things and crash the market, in order to force the Fed to bend to his will, forcing them to cut rates, no matter what — the Mario Draghi moment to do anything that needs done. This places the Fed in a position to inform the public that they don’t support trump insanity or that they will support insanoty — tough call!