If POWELL caved then that is bad for the markets
if POWELL is justified because of pending economic weakness etc then that is also bad for the markets
I am paying thru my nose for JUNE 2019 QQQ puts.... deep in the money.
I am leaning towards this stance on the FED:
However, while the markets are celebrating the very clear confirmation that the "Fed Put" is alive and well, it should be remembered these "emergency measures" are coming at a time when we are told the economy is booming.
As Dalio noted, one of the biggest issues facing global Central Banks is the ongoing effectiveness of "Quantitative Easing" programs.
As noted by Michael Lebowitz yesterday afternoon at RIA PRO
"In our opinion, the Fed's new warm and cuddly tone is all about supporting the stock market. The market fell nearly 20% from record highs in the fourth quarter and fear set in. There is no doubt President Trump's tweets along with strong advisement from the shareholders of the Fed, the large banks, certainly played an influential role in persuading Powell to pivot.
Speaking on CNBC shortly after the Powell press conference, James Grant stated the current situation well.
"Jerome Powell is a prisoner of the institutions and the history that he has inherited. Among this inheritance is a $4 trillion balance sheet under which the Fed has $39 billion of capital representing 100-to-1 leverage. That's a symptom of the overstretched state of our debts and the dollar as an institution."
As Mike correctly notes, all it took for Jerome Powell to completely abandon any facsimile of "independence" was a rough December, pressure from Wall Street's member banks, and a disgruntled White House to completely flip their thinking.
In other words, the Federal Reserve is now the "market's b*tch."
However, while the markets are celebrating the very clear confirmation that the "Fed Put" is alive and well, it should be remembered these "emergency measures" are coming at a time when we are told the economy is booming.
"We're the hottest economy in the world. Trillions of dollars are flowing here and building new plants and equipment. Almost every other data point suggests, that the economy is very strong. We will beat 3% economic growth in the fourth quarter when the Commerce Department reopens.
We are seeing very strong chain sales. We don't get the retail sales report right now and we see very strong manufacturing production. And in particular, this is my favorite with our corporate tax cuts and deregulation, we're seeing a seven-month run-up of the production of business equipment, which is, you know, one way of saying business investment, which is another way of saying the kind of competitive business boom we expected to happen is happening." - Larry Kudlow, Jan 24, 2019.
Of course, the reality is that while he is certainly "spinning the yarn" for the media, the Fed is likely more concerned about "reality" which, as the data through the end of December shows, the U.S. economy is beginning to slow.
"As shown, over the last six months, the decline in the LEI has actually been sharper than originally anticipated. Importantly, there is a strong historical correlation between the 6-month rate of change in the LEI and the EOCI index. As shown, the downturn in the LEI predicted the current economic weakness and suggests the data is likely to continue to weaken in the months ahead."
https://seekingalpha...ely-understated