Jerome ‘Dead Eye’ Powell

One of the most disturbing scenes in the series Breaking Bad was when Todd shoots and kills a boy on a dirt bike after he witnessed Heisenberg, Jesse and Todd heist 900 gallons of methylamine. Jesse: “Todd, that Opie Dead Eyed piece of shit…”

That is similar to the feeling I got after the Fed hiked the funds rate as expected, but then declined to offer the stock market much relief for its ongoing temper tantrum.

What’s this? The Fed is not doing as the vast majority of market participants expect it to do? The Fed is not taking active measures to boost asset prices?

My theory has been that since the 2016 election the Fed has firmed its resolve to extricate itself from a dangerous situation; caught with its pants down as Trump/Republican fiscal (i.e. politically instigated) stimulus was going to be laid on top of already extreme monetary stimulus.

I see a lot of post-FOMC articles out there talking about how Jerome Powell either does not know what he is doing or is an outright menace. Well, I can assure you he does know what he is doing and he’s only a menace if you are in his cross hairs.

Post-FOMC Update

I really do think we are onto something here. The dead-eyed (that’s a compliment) chief of the Fed just looked the market – and the president – in the eye and as cool as a cucumber, stated the Fed’s agenda.

That agenda has appeared to be for the Fed to extricate itself from its bloated balance sheet and an untenable rise in long-term interest rates as a financial asset bubble roared on with fiscal (political) policy fanning the flames.

Let’s go back in time to a decade ago. The credit bubble nurtured and overseen by Alan Greenspan was unwinding and that unwind was impulsive and to my eye, bent on complete liquidation of the system. Enter Ben Bernanke, TARP, ZIRP and QE (with a side order of Operation Twist). It was all financial engineering, all the time. It was monetary policy on steroids and with all those inputs it could only be a rabbit hole with new and intriguing possibilities… and no road maps showing the way out.

1 2 3 4
View single page >> |

Subscribe to NFTRH Premium for your 40-55 page weekly report, interim updates and NFTRH+ chart and trade ideas ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Gary Anderson 11 months ago Contributor's comment

This is a very thought provoking article, Gary T. Racist Trump stimulated too late in the cycle while racist McConnell was determined to destroy Obama and limited stimulation early in the cycle. Republican incompetence all the way around.

Obama gets blamed but the fault lies squarely at the feet of the Republicans who don't give a rats behind about American prosperity. They only care about themselves and the power they can accumulate.