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Tag Archives: Jay Powell

FOMC: Trust Us, Funding Pressures Don’t Really Matter

Before the repo rumble this week, Federal Reserve Chairman Jay Powell wanted to coast into a second rate cut on the comforting breeze of his insurance rhetoric. No longer one and done, that’s done, a second straight cut would be more consistent with a more forceful yet unnecessary policy response. Again, his publicly stated view is that the US needs rate cuts even though it doesn’t need them. Losing control of fed funds simply wasn’t in the plan. It’s hard to argue there’s no need for...

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Labor Data Dependent

Right now, everything comes down to the labor market. Does the US economy hang on despite stubborn and evidently non-transitory overseas turmoil cross currents? Or do American consumers rightly confident of the economic situation re-assert themselves via their wallets and deliriously spend the economy back on track? You better believe Fed Chairman Jay Powell will be watching the data very closely. If there is one thing which will move policymakers more than a plunge at the NYSE, it would be...

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Just Who Was The Intended Audience For The Rate Cut?

Federal Reserve policymakers appear to have grown more confident in their more optimistic assessment of the domestic situation. Since cutting the benchmark federal funds range by 25 bps on July 31, in speeches and in other ways Chairman Jay Powell and his group have taken on a more “hawkish” tilt. This isn’t all the way back to last year’s rate hikes, still a pronounced difference from a few months ago. The common forecast relies entirely on the subjective interpretation of the labor market....

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Gold: Big Difference Which Kind of Hedge It Truly Is

It isn’t inflation which is driving gold higher, at least not the current levels of inflation. According to the latest update from the Bureau of Economic Analysis, the Federal Reserve’s preferred inflation calculation, the PCE Deflator, continues to significantly undershoot. Monetary policy explicitly calls for that rate to be consistent around 2%, an outcome policymakers keep saying they expect but one that never happens. For the month of July 2019, the index increased 1.38% year-over-year....

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Gifts of Wyoming, Complicating A Simple Story About Bears

Curiously short on star power, the Jackson Hole gathering this year has already taken an odd turn. It’s been practically subversive. Usually when the Kansas City Fed gets together for these things each and every August, the main attraction is the top central bankers in the major economies. Outside of the Bank of England’s Mark Carney, this year there’s only Fed Chairman Jay Powell. And the only real worthwhile mention is all the discussion about bears. The symposium typically opens with a...

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The Path Clear For More Rate Cuts, If You Like That Sort of Thing

If you like rate cuts and think they are powerful tools to help manage a soft patch, then there was good news in two international oil reports over the last week. The US Energy Information Administration (EIA) cut its forecast for global demand growth for the seventh straight month. On Friday, the International Energy Agency (IEA) downgraded its estimates for the third time in four months. That wasn’t all, as the EIA’s report focused in on some more sobering aspects of the US economy....

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Payroll Friday: This Is Bad, Folks

You never fixate on a single employment report. It is a lesson that Jay Powell may not have yet learned. Either that, or he was desperately grasping for straws. The Federal Reserve is trying to thread a very fine needle; on the one hand, the rate cuts. On the other, he doesn’t want them to become a catalyst for people to say, see the economy really is weak! That means he has to claim the rate cut is a big deal but not that big of a deal because the economy is otherwise strong. Even the FOMC...

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There’s Dollar In The Rate Cut, But Not Nearly Enough Dollar

The insurance rate cut has been issued. Telling the assembled members of the press this is nothing more than a “mid-cycle adjustment”, Chairman Powell was cautious not to betray too much concern. The first rule of central banking is not to make anything worse. Subprime must always be contained. Yet, he has the unenviable task of explaining what is a complete (and for many an unnecessary) 180-degree turnaround. Mere months ago, inflation and acceleration, an economy risking becoming too good....

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The Correlations Behind The Rate Cut(s)

In every likelihood, the Federal Reserve today is going to join other central banks around the world who have already cut rates. It is the synchronized signal completing the turn from globally synchronized growth into a globally synchronized downturn. To most people in the United States, at least, this is a puzzling shift.   The unemployment rate says things are rock solid. Only seven months ago, the same Federal Reserve officials now voting for “additional accommodation” were then...

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Powell Readies His Noose

The problem continues to be, I’m sure, is one of perception. Economists, politicians, and mostly central bankers have been saying for years that the real economy is the one you see in the unemployment rate. Things are booming. The labor market is awesome, even epically tight. Between last year and this year, going by the unemployment rate the economy has only gotten better. Why in the world would the Federal Reserve be contemplating rate cuts? After all, who cares if inflation is less than...

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