Posted on 03/01/2018 9:53:49 AM PST by SeekAndFind
Jerry Powell apparently doesn’t get it.
The new head of the Federal Reserve isn’t supposed to imply that he doesn’t work for Wall Street. And he’s not supposed to say, as he did the other day in front of Congress, that “we don’t manage the stock market — we manage stable prices and maximum employment.”
That’s not what Wall Street and the stock market want to hear. And that was proven by the fact that the stock market dropped sharply on Tuesday when Powell was speaking.
And Powell’s comments were one of the reasons Wall Street’s pros couldn’t get a good rally going on Wednesday, even though it was the time of month when the market is usually manipulated higher so professional money managers can brag about their performance.
The Dow Jones industrial average closed Wednesday down 380 points, to 25,029.
Investors are undoubtedly worried that Powell will be more like Paul Volcker, who left as head of the Fed in 1987 after conquering out-of-control inflation.
Wall Street would like him to be more like more-recent ex-Fed bosses Alan Greenspan, Ben Bernanke and Janet Yellen — who wanted to be tight with politicians and loved by the investment community.
Volcker had it right, but you won’t fully understand that until there is another case of inflation that starts eating into the buying power of all that money you’ve saved over the course of your life.
But don’t worry. Powell will probably come around. The pressure to be loved by the rich and powerful is just too hard to ignore.
(Excerpt) Read more at nypost.com ...
There is a solution to all these misunderstandings - get rid of the federal reserve.
The country can’t keep steppin’ and fetchin’ for Wall Street the way it has been.
I really don’t care what Wall Street wants to hear.
Thanks SeekAndFind.
I’m amazed how these “investors” run like lemmings over the sell-sell-sell cliff at the slightest hint of rate hikes or inflation.
The FED tries to stay in step with the bond market (which is much bigger than the FED). The bond market is threatening to run away from the FED, which only controls the overnight fed funds rate. The FED has no choice but to raise it’s rate, the bond market has already been raising all other rates for some time.
When the FED stays in concert with the bond market, market forces act as they should. It’s not always easy.
As far as getting rid of the FED, that’s not happening. As with every financial force individuals can’t control, our job is to react as needed to what movement in markets tells us.
Assuming your goal is to build wealth.
Every share of stock that got sold was bought by someone. It’s no surprise that investors would protect some profits at an inflection point like this, after the runup we’ve just experienced.
I believe that the FED charter simply states that the FED is to maintains inflation at 0%. Something they have never done.
I don’t believe it says anything about the Employment rate.
If they followed their charter then the price of a loaf of bread would still be 10 cents.
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