Posts Tagged ‘Jerome Powell’

Notes From Underground: The Week That Was

December 19, 2021

This past week has been the most challenging to recap because at least 20 central banks released statements about their monetary forecasts and outlooks. The most significant banks that we were watching — the FED, SNB, BOE, ECB and BOJ — performed as expected as the FED, ECB and BOJ announced the expected outcomes.

The Bank of England raised its overnight lending rate by 15 basis points as they had already ended asset purchases so a minimal rate increase was all they had to give in order to slow the rise in headline inflation. The Powell FED took the most DOVISH route possible in an effort to placate the Biden White House and its effort to stem the narrative of headline inflation and election outcomes. We at NOTES FROM UNDERGROUND had contemplated a complete end to QE but Powell (in his efforts to do something) merely doubled the pace of tapering laying the outcome to a finality in March rather than June. This is only important if the FED maintains its “forward guidance” of no rate hikes until the U.S. central bank’s BOND PURCHASES have concluded.

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Notes From Underground: Coal for Some Stockings?

December 12, 2021

If you’re only looking at the headlines from the past 48 hours, there is something major going on. First, on Friday afternoon Bloomberg reported that the G-7 finance chiefs are planning to discuss inflation as prices soar and the Financial Times followed on Saturday about the U.S. Democrats pushing the Federal Reserve for tougher action against inflation. These two stories are everything that we at NOTES FROM UNDERGROUND have been discussing since the Dems’ poor election showing last month.

The White House polls — and thus the political operatives — reflected that inflation concerns were going to be the biggest issue for all Democrats in 2022, which is why there was a sense of urgency to use SPR and release oil to drive headline energy costs down. It’s the classic political ploy to appear to be doing something. What’s next? Wage and price controls?

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Notes From Underground: A Possible Solution to the Central Bank Dilemma

November 14, 2021

It’s been. another week in which headline inflation concerns has jolted markets, particularly in the interest rate space, but not as much as many investors and traders would have expected. The yield curves in the U.S. FLATTENED as markets seem want to believe that the FED will raise rates in an effort to CURB the enthusiasm of the stickiness of recent price increases. As Peter Boockvar pointed out in his piece on Friday’s Michigan Consumer Sentiment Survey, confidence declined due to rising concerns over the “escalating inflation rate and growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.”

Consumers noted that the time to buy a car fell to the lowest level on record dating back to 1978. Those thinking it is a good time to buy a home was the lowest rate since 1982 when mortgage rates were far different than today’s very low loan rates.

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Notes From Underground: What Turned the Markets On Friday?

November 7, 2021

The U.S. and Canadian unemployment data both were somewhat stronger than expected. The markets were trading in focus with the robust U.S. data — equities higher, DOLLAR firm, and bonds trying to adjust in the face of the FOMC‘s tapering plans.

Things took a turn around 11 a.m. eastern time. The precious metals began a ferocious rally, bonds rallied, and all the currencies began to rally actually closed higher on the day even as European interest rates moved similar to the U.S. and equities dropped from their all-time highs. What could’ve been responsible for the moves on a day of good data and, more importantly, the prevailing sense that the Biden White House was FINALLY going to get its infrastructure bill.

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Notes From Underground: Will It Be An Inflated Jobs Report?

September 2, 2021

After FEDERAL RESERVE Chairman Jerome Powell’s Jackson Hole speech, the jobs data may have taken on added significance. Inflation was not a concern for Powell as that is considered transitory within the bowels of the FOMC. The failure of the employment situation to enable all who lost jobs due to COVID “through no fault of their own” has regained paramount importance.

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Notes From Underground: Powell’s Pathetic Political Posturing

August 29, 2021

First of all, my offer of any part of a $10,000 bet with 10-1 odds against Jerome Powell being renominated as FED CHAIR is OFFICIALLY RESCINDED. The Fed Chair’s speech was so pathetic that it can only be explained by his desire to be renamed central bank head. Powell’s speech would be called DOVISH on any given week but there were six FED presidents speaking out in favor of moving up the schedule for tapering QE to counterpunch. It was not only the increased hawkish stances of previous UBER DOVES, which provided cover for Powell but the highly esteemed Mohammed El-Erian and Larry Summers also called for the FED Chair to be bold at Jackson Hole.

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Notes From Underground: For What It’s Worth

August 24, 2021

There is a wonderful song from the tumultuous 1960s by the band Buffalo Springfield that is so apropos for the financial markets over the last two weeks (staying away from Kabul). The lyrics for the first two verses describe the situation for investors as we approach the tectonic plates of monetary policy that have provided the Kansas City Fed Symposium at Jackson Hole with its heightened significance. Several keynote speeches revealing policy changes have been delivered to this August group.

“There’s something happening here ,But what it is ain’t exactly clear
there’s a man with a printing press over there, telling me I got to beware
“There’s battle lines being drawn,nobody’s right if everybody’s wrong
Young people speaking there minds,Getting so much resistance from behind”

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Notes From Underground: The Dog Days of Summer

August 12, 2021

The doldrums of August are upon us … though not really. There is the ongoing debate about inflation prompting the FEDERAL RESERVE to accelerate the pace of its asset purchase tapering — when it begins — while it is the elevated levels of minority unemployment that will likely force the FED to maintain its lower-for-longer policy.

The chatter remains about REAL INFLATION being above the FED‘s 2% mandate, a self-imposed threshold, while JANET YELLEN/JEROME POWELL discuss REAL UNEMPLOYMENT being above its mandate of maximum full employment. The central bank has promoted both mandates at times so it is difficult to deem what is REAL. It is of great interest that in the last few days KNOWN FED DOVES have taken a decidedly more “hawkish” posture. Atlanta Fed President Rafael Bostic, St. Louis Fed President James Bullard, and in Thursday’s Financial Times, San Francisco Fed President Mary Daly all raised the issue of reducing stimulus as soon as this year.

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Notes From Underground: Bye Bye, Jerome Powell

August 8, 2021

Early last week Senator Elizabeth Warren made her case against Chair Jerome Powell. In a Financial Times article, the senator blasted Powell for his light regulatory touch while praising the efforts of Governor Lael Brainard. Yet many believe Powell is a shoe-in to be reappointed Fed Chair (as much as an 85% chance at some sites).

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Notes From Underground: Wow Unto Chair Powell

July 27, 2021
The previous blog post about President Lagarde painting the FEDERAL RESERVE into a corner OUGHT to be revealed tomorrow as there is expected to be no change in FED policy and I believe that Chair Jerome Powell will do his best to pose as dovish as possible. If there is a CHANGE it will be in the mix of the QE as the SOMA will be moved to cut MBS purchases and replace mortgages with longer-term treasuries.