Dovefest: Powell The Hawk Flew Out The Window, Turned Into A Dove

Some thought the Fed would hike half a point today. Instead, faster hikes now appear more likely in 2019.

I was laughing yesterday at this Bloomberg projection via the Daily Shot.

I am not sure where Bloomberg got that number from as CME Fedwatch had a 95% probability of a quarter-point hike.

Forget the outcome, either Bloomberg or CME was wrong on their percentages.

Dot Plot Fantasyland

For the rest of the year, FOMC members are roughly split between two more hikes and three more hikes. However, two participants think the Fed is done hiking.

Refreshing

"Refreshing" is a good description of Powell. Bernanke and Yellen followed a Phillips Curve dogma, describing policy as if Fed actions allowed strong control of employment and inflation. Powell recognizes that policy effects can be "flat" and uncertain, and seems to respect data. https://t.co/XSKxcgOSiA
— John P. Hussman (@hussmanjp) March 21, 2018

The question though is, will he say the same after at 20% correction is stock prices? I think the FED is in the corner and like his predecessors when the time comes and he realizes how many disposable incomes are linked to equities he will be force to act differently.
— Michael (@mnicoletos) March 6, 2018

Both Danielle DiMartino and John Hussman found Powell's first press conference refreshing, DiMartino for the stock market, and Hussman because the Phillips Curve.

The third Tweet above is where the rubber meets the road. What happens if the stock market falters?

Lovey Dovey

Despite the lack of hawkishness, the equity markets closed lower.