I am posting a podcast recorded last week with David Rosenberg and Peter Boockvar (and moderated by Richard Bonugli) that is still really relevant. On Tuesday, Federal Reserve Chairman Jerome Powell delivered a speech in France at a gathering honoring the 75th anniversary of the since the Bretton Woods agreement. The speech epitomized the Fed’s third mandate as espoused by Vice Chairman Richard Clarida over the past five months.
We at Notes From Underground have continuously pointed out the significance of the global financial system as being a hindrance to the FED relying on U.S. economic data as the key determinants of its interest rate policy. Powell said:
“Since the crisis policy makers are even more keenly aware of the relevance of global factors to our policies. The global nature of the financial crisis and the channels through which it spread sharply highlight the interconnectedness of our economic, financial, and policy environments. U.S. economic developments affect the rest of the world, and the reverse is also true. Pursuing our domestic mandates in this new world requires that we understand the anticipated effects of these interconnections and incorporate them into our decision making.”
Chairman Powell’s words represent the capitulation of the FED to a place analysts in global macro finance have long felt to be so obvious. I will expound on more of what may be some investment possibilities coming from the FED‘s decision to rely on the global environment to help set its policy. Be aware that the FED has chosen Paris as the site to deliver the surrender of its dual mandate. Remember, this also comes after Powell admitted last week that the PHILLIPS CURVE was also very suspect. More tomorrow!
Tags: dual mandate, Federal Reserve, Jerome Powell, Richard Clarida
July 17, 2019 at 8:45 pm |
Thanks Yra! This was one of your best podcasts.
July 18, 2019 at 7:06 am |
hubris, noun
hu·bris | \ ˈhyü-brəs \
Definition of hubris: exaggerated pride or self-confidence, e.g., when Central Bankers believe their policies can cure all ills of the world, perceived or real.
July 18, 2019 at 6:57 pm |
Professor—it appears to be all Greek to the central bankers
July 18, 2019 at 4:36 pm |
Yra excellent podcast!
If the politicians that run our country decide to not fund the debt do you have any ideas where one can put there money?
July 18, 2019 at 6:56 pm |
Bob—you don’t have to be a weatherman to know that the wind is playing against that happening
July 18, 2019 at 10:11 pm
Positively 4th Street
July 19, 2019 at 8:16 pm |
Yra, do we really need a rate cut, not that I can figure that out anymore, out of the game too long. Hope you and Janice are well as well as the kids and grandkids. Frank
July 21, 2019 at 7:01 am |
Mr.Frank–I am glad to hear from you.The game is simple in that the world’s central banks are the self-anointed philosopher kings of the world as this weekend’s splendid piece in Barron’s by Jim Grant makes clear–We don’t need a rate cu per se but the ECB led by the financial megalomaniac Mario Draghi have placed the FED in a very difficult position.In an effort to secure the ultimate endgame of a EUROBOND by stealth Draghi has kept the Eurozone banking system in a downward cycle and the massive buildup of the ECB balance sheet with sovereign and corporate debt has meant that eventually the EU Commission will push for a eurobond and the fiscal harmonization of the EU—all sovereignty will be surrendered by the nation-state to the Regional authority in Brussels.The endgame is obvious but it the road of perdition that makes it so very dangerous—put on your D-Mark cap and think in terms of US monetary policy is being made in Frankfurt in an effort to complete the fiancial castration of the Germans—right under their nose.Dangerous forces have been unleashed upon the global financial system in an effort to sustain the forces of free flowing capital in a Davos directed world.Let’s plan a breakfast soon in your neck of the woods–much to catch up on