A More Flexible and Risk Aware Fed Chair Powell Lifts Markets

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    Helmholtz Watson

    Federal Reserve Chairman Jerome Powell spoke in a…


    Helmholtz Watson

    The Powell Put at work as we trade 2588 – a slew of Fed Speakers coming out now …

    Helmholtz Watson

    [b]Atlanta Fed’s Bostic speaking in Chattanooga Tennessee


    Market turmoil a symptom of uncertainty around outlook
    worry over tariffs has dominated discussions on outlook
    patient approach wanted to adjusting Fed policy
    sees little need to engage in restrictive Fed policy
    Fed hike in December likely lifted rates close to neutral
    solid US growth in 2019 but bit slower than 2018
    Both Main Street and Wall Street are concerned about risks to growth
    likely slowing growth in 2019 not result of fundamental weakness in economy but returned to trends driven by slow growth in the labor force
    businesses are becoming defensive and planning for slowdown. Holding off on investment plans
    part of issue of government shutdown is how long it lasts
    we’re worried about the shutdown’s impact on data
    will start seeing impact the shutdown run some time
    shutdown could push back type of growth we projected
    business response to terrorist has been to pause
    Yield curve is pretty flat right now. The Fed has contributed to some of that flattening.
    Going to do all he can to make sure the yield curve does not signal a recession.
    Fed should let economy run for awhile to see how it responds
    No urgency to make policy changes ‘just to run to a number’
    Fed needs to strongly signal that it’s not locked into a trajectory
    Policy could move in either direction
    Open to cut if downside risks all come to bear
    Comfortable ‘hanging out’ near neutral level while the Fed takes stock of how the economy is responding to higher rates
    Hearing from businesses across the board that they have become cautious about 2019
    Evolution of economy should dictate Fed’s next move


    Richmond Fed President Barkin:

    I do not believe we are at neutral yet, but we are near.
    Government shutdown has indirect impact on business confidence
    The longer the government shutdown continues, the more you are likely to impact confidence
    In favor of normalizing interest rates at the right pace, right time
    Uncertainty increase by lack of full economic data due to government shutdown
    Economy will tell us whether time is right to go back to neutral, depends on data
    US is not heading to sustainable place on deficit
    Uncertainty more challenging for the economy
    Direct impacts from tariffs right now is not significant
    Fed very-much focused on hitting its inflation target
    Normalizing rates not aimed at restraining economy

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