Ho-Hum. Buy The Dip
I've said it before and I'll say it again: Jerome Powell isn't the best communicator.
Just ask the fourth quarter of 2018, when his (initially celebrated) "plain English" approach to conversing with market participants manifested in "long way from neutral," a soundbite which quickly pushed stocks "a long way" from where they were before he uttered that infamous phrase.
However, Powell figured out how to compensate for an inability to lean on academic doublespeak. He identifies talking points t
Rising yields show confidence in the economy? I remember working in investment banking, and, of course, higher financing rates were always associated with extra confidence in a borrower’s ability to repay their loans. It was their privilege for being less creditworthy. And for some, no rate was discussed as their creditworthiness was non-existent. Those were the borrowers for which we held the highest esteem as no rate was suitable for them. Maybe our government will get there soon.
The currency creator is not a borrower. Treasury securities are simply interest bearing dollars. When money thinks there is more interest to be made elsewhere, they go there.
As if … after TARP, TALF, QE (all of them), Taper Tantrum 2013, all of the BOJ’s “work”, all of the ECB’s “work”, the 4Q2018 J-Pow misstep, the 2019 repo fixes, the 2019 “mid cycle rate adjustments”, and the COVID-crash gymnastics … Jay and Janet would just let go of the wheel and let the car meander where it may, when they collectively have the power to stomp on the back-end of the yield curves (both nominal and real) whenever they darned well feel like it ?
What show have these folks been watching since 2009 ? Jeez Louise, it’s like “The A Team”, each episode ends exactly the same way.
“I love it, when a plan comes together” ?
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