This Is The ‘100-Trillion Dollar Question’
In the aftermath of Jerome Powell's overtly hawkish address in Jackson Hole, markets are compelled to ponder a "100-trillion dollar question."
Powell left little doubt last week about the Fed's near-term reaction function. Policymakers are, in fact, working from a de facto single mandate. Inflation is all that matters. Officials aren't just prepared to countenance a loss of economic momentum, they're actively trying to facilitate a slowdown. The same goes for the labor market. Job losses are ac
I suppose it was only a matter of time before the clownshow that appears so ubiquitous in Washington seeped into the dealings of the country’s central bank.
What exactly does that mean in the context of this article?
Tasseomancy may be the explanation to provide context.
The article and the analysis therein are good. My comment related to the theatrical posturing emerging from the Fed.
I suppose it was only a matter of time before the clown show that appears so ubiquitous in Twitter seeped into the comments of this most intellectual site.
H-Man, I am in the camp it may be quite awhile before we see a negative print on jobs. Friday estimates are 300K Even if the market starts printing less than 100K in jobs, I don’t see the Fed pivoting. If true, those negative numbers may not show up until the summer or fall of 2023. This is going to be a very slow grind.
A generation of investors have been imprinted since infancy with Fed put reflexes, and Powell hasn’t proven himself to be Nurse Ratched, so I think on “bad news” the inmates will continue to smoke, gamble, smuggle booze and women, fight orderlies, guzzle gamma, throw drunken bear rallies, and generally act out.
Until enough of them (us!) get lobotomized, either by the Fed implacably hiking into a real job-eating recession, earnings falling over the 2023 cliff, or the suffocating pillow-on-face of intractable inflation.
Or, we might break out of the Cuckoo’s Nest after all.
+1 jyl. I cannot resist asking whether Cramer is our Cheswick in your analogy, and whether our Walt here will prove to be more McMurphy (leading us towards the promised land but not taking us there), or Chief.
My sole quibble in this essay is the use of the term “post-pandemic”. We are “intra-pandemic” with no exit in sight, and to the extent that our appreciation of events is influenced by that inaccurate ‘post’ construct the more likely it becomes to arrive at false conclusions. Making big bets while convinced that ‘Covid is over’ seems to me unwise, individually or nationally. To the extent that our system is reliant on gambling (including stock and commodity markets – just different venues and plays from poker and roulette) the more brittle and breakable it becomes.
For those who think any sort of pause or pivot is nigh, go back and look at the last time. The high inflation Volcker “conquered” lasted 15 years in some form. Nixon’s price controls were in the early 1970s and the CPI had been rising for a while before that. And the rate that finally killed the beast got up to more than 20% (prime rate touched 22%, I think). As soon as the beast was slain we fell into a nasty recession which essentially destroyed the savings and loan system. In my home county in Iowa seven of eight S&Ls and one of the three banks went bust. The other S&L had negative capital but the government wanted to save it and I was on the team that pulled it out of the hole. We’ve been in a deeper hole than now and climbed out but I see no quit soon. The S&P was at 350 in 1982 and rose like a rocket until the “dot.com bubble” burst. The problem with the current hole is that we really don’t know quite how the supply chain aspect of the problem will factor into a final result.