Here’s an update an hour later. The “”markets”” remain in full lock-up mode.
There have been a lot of ridiculous days of obviously stage-managed US equity “”markets”” but today is shaping up to be one of the more blatant examples.
And it’s got some stiff competition.
Not so coincidentally, Powell is busy answering questions before the House as this travesty unfolds.
Here’s the most telling part:
Federal Reserve Chairman Jerome Powell, asked if there’s a “Powell Put” in financial markets, said the U.S. central bank will pay attention to financial-market volatility if it threatens economic stability.
Patrick McHenry, the ranking Republican on the House Financial Services Committee, asked the chairman during a hearing Wednesday to respond to claims that there is a “Powell Put,’’ meaning the Fed will change the course of interest rates in response to volatility — in effect underwriting risk-taking.
Powell said anything that impacts the Fed’s mandate of maximum employment and stable prices matters, and noted that the central bank’s “tools work through financial conditions.’’
(Source – Bloomberg)
Note that Powell was asked a direct question and was allowed to provide a non-answer.
The obvious follow-up questions should have been:
“Mr. Powell, for all of US history the equity markets have been the derivative of economic strength. IN other words, a strong economy leads to strong equity prices. You’ve just indicated that the opposite may be true. In plain language, tell us how the Fed suddenly knows this to be true and, if so, how and why it believes itself to be in charge of using equity markets as a driving force of economic expansion?”
“Related question; what if the Fed is wrong about this? What if all the Fed has done is drive a massive wealth gap but delivered nothing to actual underlying economic growth, but has in fact worsened things? What sorts of penalties should apply to yourself personally and to the Fed institutionally if it turns out to be an even larger disaster than 2000 or 2008?”
The “Powell put” is most definitely in action and the msot important follow up question should ahve been:
“Mr Powell, the Fed clearly took more interest rate hikes off the table due to a sharp market sell-off in December. Now that there’s been an euqally sharp market rise since then, why are interest rates still off the table?”
These questions won’t be asked because the “Rulers for Rulers” lessons apply. As long as people in charge are getting fantastically wealthy off of this process, the Fed is all for it. Anything else about employment or inflation is pure garbage. The Fed doesn’t care one whit about either of those things.
The Fed exists to provide air cover for the continued plundering of real wealth from the many to the few.