Powell Offers His Reassurances To Investors
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Any worry the market had about the Fed moving away from bowing to the will of investors, was worry put to rest on Wednesday after the Fed Chair offered his reassurances the central bank would be looking to cut rates again - and sooner than later in that.
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And what are the assurances of the Fed really worth in your opinion? And what does Trump have to say about it?
We believe we're in a very dangerous place right now, where the Fed needs to be more worried about financial stability risk associated with a strategy that continues to direct investors into a stock market that has flown way to high on borrowed wings. A capitulation in stocks has been overdue and should be a healthy, yet painful step, in finally moving on from a crisis that started over a decade ago.
As far as the US administration goes, it's interesting. The US administration has been committed to a trade policy that should pressure the US Dollar lower, not higher. This strategy is therefore aligned with a loose form of monetary policy, which means the more the administration pushes to disrupt on the trade front, in an effort to rebalance the US economy, the more it pressures the Fed to do exactly what it wants - which is to continue to see a Fed that errs on the side of rate cuts and accommodation (ie equals soft Dollar).