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Against The Odds, Powell Threads Needle. For Now
Jerome Powell's odds of skating through the March FOMC press conference unscathed were long.
There was quite a bit at stake, and Powell isn't a particularly good communicator. He's affable enough, sure. But he has, in the past, demonstrated a propensity to say the "wrong" thing or, worse, commit sins of omission by sticking too close to the script, perhaps due to some lingering PTSD left over from 2018's infamous "long way from neutral" debacle.
Somehow, though, he managed to turn March's over
Well done, Chairman Powell. I was MEGA-impressed when he made it clear that the Fed planned to react to actual inflation data, not Wall Street forecasts.
Meanwhile: “10-year yields reached 1.687%, the highest since January of 2020, when COVID-19 was still just “a mysterious virus spreading rapidly in China.”” That brings to mind something I have been wondering about when I read the ever-higher economic growth forecasts “once” herd immunity is attained.
As I recall, momentum in the US economy was already ebbing BEFORE Covid hit us. I guess the assumption is that the “stimmy” money will put paid to that But I wonder why we are supposed to believe that one-off government payments are about to put the USA on a permanently higher growth trajectory than we enjoyed in the pre-virus days.
Derek I am in agreement that we were more than slowing pre-pandemic and the talk on wall street was about downgrades in bond ratings. Velocity of money primed by stimulus and normalization. Plus it will be party time.
But higher yields should help a bit with the velocity-of-money problem; I think that’s part of the calculation for Powell and other Fed members.
In this context, on Monday I was astonished to hear that the EU Travel & Leisure sector had reached record highs. Not post-Covid highs, but all-time highs. This while EU countries are back to slapping on travel and other restrictions and questions remain about their vaccine roll outs.
Perhaps “investors” are not only acting on “Covid fatigue” in their personal lives but also in their market outlook. So it’s “let’s try something different” time. In an era where ETFs etc allow for instant push-button rotations, it’s quick and easy to join the Pollyanna trade.
Check out real time flight traffic websites (Flightradar24 or Flightaware, for example) and scan out to continent-level view. Air travel may have taken a hit since 2020, but it isn’t “The Stand” out there. Yet.
There is not an easy way (that I’ve found) to filter on cargo v. passenger flights. But one can filter on plane type, such as: “B77” for Boeing 777 flights. Or “AUA” to check on travel to/from Aruba (maybe not the best idea if one is social distancing in snow country).