The Fed won’t raise rates preemptively, Jerome Powell told US lawmakers Tuesday, testifying before the House Select Subcommittee. The factors affecting inflation will “wane” over time, he added.
Powell’s prepared remarks were released on Monday night and there were no real “surprises” during the hearing.
You could argue the balance of the Fed banter skewed dovish Tuesday. Mary Daly, for example, said she’s “bullish on the recovery” but that conditions haven’t quite improved enough to warrant the commencement of a taper. “‘Substantial further progress’ is within our line of sight,” she remarked, during a virtual event with the Peterson Institute for International Economics. “It’s time to start talking about how we might taper asset purchases but talking about rate changes right now isn’t even on the table.”
John Willams was on the record again, following up on Monday’s dovish musings. “[The rates discussion is] still way off in the future,” he told Bloomberg. “We’ve made progress since December of last year. I still don’t think it’s close to the ‘substantial further progress’ that we set out.”
Loretta Mester offered a reasonably conciliatory take. “We’ve made a lot of good progress. I’d like to see some further progress, especially on labor-force participation,” she said. She also refused to reveal her dot.
It’s difficult to find the right adjective when it comes to describing how overtly silly the semantic acrobatics have become around “progress.” There’s been progress, yes. But is it “substantial”? If so, how substantial? And assuming you can quantify it, is it substantial enough? Yes? Ok, well, substantial enough for what? Just talking about a taper? Or actually announcing a timeline? Certainly not substantial enough for rates to be higher. For that, we’d need to see some really substantial progress. And so on.
Whatever the case, the Nasdaq closed at a record Tuesday, which I suppose is all that matters. Stocks climbed as Powell spoke to Congress. 1970s-style inflation is “very, very unlikely,” he said. (That’s good to know, because have you seen the raw footage of Legoland experiencing hyperinflation? It’s terrifying.)
Treasuries rallied again despite a tailing two-year sale. “This bullishness is consistent with investors becoming habituated to rates in a lower range as opposed to another bullish shock that further recalibrates expectations,” BMO’s Ian Lyngen and Ben Jeffery wrote, in a Tuesday afternoon note. “We’re all too cognizant that to characterize a hawkish Fed as a bond-friendly impulse is at odds with what one considers the traditional market dynamics [but] there is little question that a subset of market participants interpreted the Fed’s dot plot and tapering talk as a net positive for 10s and 30s,” they added. (There’s more on the dynamics behind that here.)
I wish I could tell you I care about Bitcoin’s trials and tribulations, but I’d be lying. It’s hard to fathom a more asinine discussion than a debate about what it means when a cryptocurrency forms a death cross. I have to fight back the urge to be needlessly derisive.
Speaking of bubbles (see what I did there?), Bloomberg hosted a Q&A event with Jeremy Grantham Tuesday. It was billed as an opportunity for terminal subscribers to “Join the discussion,” but you’d be forgiven for suggesting it was really just a forum for Grantham to roll out the usual laundry list of folksy superlatives.
Most of what he said was your standard Grantham fare — “humdingers” and what have you. “Checking all the necessary boxes of a speculative peak, the US market was entitled historically to start unraveling any time after January this year,” he declared.
There was one noteworthy bit of pseudo-insight, though. “Meme investing — the idea that something is worth investing in, or rather gambling on, simply because it is funny — has become commonplace,” Grantham said, calling the meme stock mania “a totally nihilistic parody of actual investing.”
That’s correct. But life itself is nihilistic parody. And it’s never clear whether we should be laughing, crying or both.
Day what you will about the tenets of– no wait, I’ve done that one before.
OVER THE LINE!
Meh
Are you employed sir?
There it is.
“Actual investing” is a nihilistic parody of labors production and creativity.
I view the meme participants as armchair anarchists.
One thing that pisses me off with that point of view is that the person offering it usually doesn’t understand speculators do provide a service to the community – liquidity.
Financing businesses, young and old, equity or debt, would be drastically more difficult if there weren’t functioning secondary markets.
Now, that being said, I’d be the first one to concede it can be taken too far. In general, I’m in favor of a Tobin tax, applied to ALL financial instruments including derivatives and OTC, to slow down short term trading.
Not sure Legos are actually capable of sensing inflation. They are made from ABS plastic which has no true melting point, so that would seem to rule out much sensitivity to mere price level changes.
“Armchair anarchists”… touché! Who doesn’t like a little alliterative appellation now and then. Up there with, Agnew’s, “nattering naybobs of negativism”.
Yeah, I love “Armchair Anarchists.” I’ll probably steal that for an article title eventually.
I do not believe I heard that myself before, since I’ve read so much I do consider anything coming out of my mouth or pen to be some form of plagiarism. I would be flattered
Mr. Heisenberg
Yes it is fashionable to be an armchair anarchist today. Much like it was fashionable in Mozart’s day to wear a wig and dance at the ball.
But the arm chair anarchist today, are the guys a saw in line at Academy sports buying ammo at 9:00 a.m.. according to the clerk sees people line up every day at 9:00 a.m. to buy more ammo.
Now if you could afford ammo at today’s prices you’re a rather in the privileged class. Since when has the privilege class revolted against the terror of the poor?
What I think we need is a mental rational reset. The armchair anarchists aren’t paying the rent for the corporations. It is the poor that pays the rent. The corporations are the natural Ally of the poor because the poor are their customers. So if you ask them they would rather, in a rational world, to agree to universal income for the poor versus tax cuts for the wealthy.
So I think you should take on the armchair Antichrist anarchists. Maybe they can drown their hypocrisy in beer. They certainly can’t drown it in their humanity, which is by the way, the way of Christ.
kudos to H for hinting that “substantial further progress” is the most opaque term in the history of central banking.
“It’s hard to fathom a more asinine discussion than a debate about what it means when a cryptocurrency forms a death cross”
Hilarious, … thanks for that one…