EC Some Thoughts On What Is Happening

Going forward, there will be a press conference after every FOMC meeting. In this sense, every meeting is live.  However, after the Fed hiked rates in December, its once a quarter pace seen in 2018 which has long been signaled to slow in 2019, means that no change in policy was expected until March in any event. There is plenty of time for the Fed to monitor developments in both the economy and financial markets before action becomes urgent. Markets generate a signal, but it is often embedded in a great deal of noise. And it seems doubly true now. The volatility here at year-end is unlikely to be sustained, but without more encouraging signals from Washington, the markets will likely remain treacherous in the New Year.  

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Barry Hochhauser 2 years ago Member's comment

Good article and comments.

Carol W 2 years ago Contributor's comment

First they should STOP the press conferences..JP screwed up when he went off script..his autopilot remark was a real special kind of stupid. Plus the press does nothing but misinterpret adding kerosene to the fire. Less info is more when it comes to the Fed. Transparency has been way oversold.

Marc Chandler 2 years ago Author's comment

I do not think #Powell broke fresh ground indicating that the balance sheet reduction was on autopilot. The #Fed has intimated it before. It indicated that the balance sheet is not long a policy signal and that its reduction was technical in nature and would continue unless, the Fed approached the zero- bound again.

I also disagree about transparency being oversold. Given the immense power of the Fed and its relative insulation, transparency it seems to me, is integral to its accountability What is it doing and why? I get strategic ambiguity and can accept temporal inconsistencies, but I for one am happy that the purposeful obfuscation of the #Greenspan era is over--that "Secrets of the Temple" is a period piece. The system evolves.

Carol W 2 years ago Contributor's comment

Sir, you misinterpret me. #Powell can't be data dependent and on autopilot simultaneously. I'm all for the Fed blathering to the masses about what it's up to. Delivery your little speech and get the hell of the podium. The post press conferences are stupid.

I never referred to that Ayn Randster groupie's marble mouthed delivery but now that you brought him up, it was an insult to the public and he exposed himself as the fool he was. Worst Fed chief of all and that's saying a LOT.

Gary Anderson 2 years ago Contributor's comment

Greenspan created the New Normal with financialization, hoarding and derivatives, Carol. That is either a stroke of genius or absolutely diabolical. I don't like it, but in an advanced society, protecting collateral seems to be important, especially when that collateral is debt.

Carol W 2 years ago Contributor's comment

regarding your Greenspan comment I posit the latter. cheers

Gary Anderson 2 years ago Contributor's comment

So, basically, Powell said economic growth slowed but is on track to increase. What does Wall Street know that Powell doesn't know?

Moon Kil Woong 2 years ago Contributor's comment

This decline is heavily driven on politics, more on political destabilization caused by Trump than anything else. Because of this, as he addresses the uncertainty the market is bouncing back up rapidly. If the China trade war end and the uncertainty over the Fed ends the market may be set to rally strongly. However, this remains a big if, just like the potential for a deal to reopen government offices.

The other big reason for the market decline is the fall in oil which adversely affects many companies in the US and many economies. Trumps insistence that he wanted lower oil prices as low as $1 and pushed for Saudi Arabia to make it so may be a bad wish because if it came true it would collapse large portions of the US economy. We are dependent on oil these days as much as we ever were. It's just that we are now a large producer as well rather than a giant consumer.