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Investors Implore Powell’s Fed: Go Big Or Else
Did they cancel the recession again? Or are market participants just confident in the Fed's capacity to manage the burgeoning slowdown?
I don't know the answers. But I do know the risk tone on Wall Street improved markedly in recent days (choppy price action aside), with investors' spirits buoyed on Tuesday by a softer-than-anticipated read on US producer prices.
The fear headed into this week was (and I suppose still is pending CPI) that inflation updates out of the world's largest economy mi
Let’s consider what we can say about the Powell Fed with high confidence:
1) They hate causing surprises. When inflation data released during the communication blackout period suggested matters were more urgent than originally thought, they didn’t just up the hike at the next meeting, they got Nick on the phone and had the WSJ leak the move.
2) They over communicate. That’s been discussed here plenty of times.
Add those two things up, and you can be damn sure we’ll know the exact size of the September cut well before the FOMC meeting even starts.
Another thing one could say about the Fed: It and Jay Powell have lots of tools at their disposal but there is only so much they can do to micro-manage a $29 trillion economy that also happens to be the linchpin of the global economy, with all that entails. Jay Powell is not perfect, but fwiw I think he’s the best Fed chair since Volcker.
I have had just about enough of whiny “investors” who want the Fed to make them richer. I have been investing since the 1960s in much more difficult conditions than we have now. I earned less than average pay and my wife got about 60% of what a man would have earned in her job. Still, we managed pretty well and sacrificed less that we might have. Five percent interest is chicken feed. Instead of hollering at the Fed maybe these “investors” should go after the corporate bosses spending all the company money on buybacks. It seems to me that CTAs and derivative players have a much larger playground with more tools and more options than simple market punters. Rates up, rates down, vol up, vol down, etc. There are apps for those. Sitting around begging for exogenous drivers to turn favorable is kind of embarrassing and to my mind reflects a certain lack of skills. The Fed’s job is macro management not stock market enrichment.