Every summer, the Fed throws a big party at Jackson Hole, Wyoming. The Fed chairman typically gives a speech about the money matters of current interest, and anyone who is anyone in the markets-and-finance biz gets invited (Source). “The Kansas City Fed will host its 45th annual conference starting today at the Jackson Lake Lodge in Wyoming’s Grand Teton National Park. The three-day meeting brings together economists, academics, U.S. Government officials, and news and financial media to discuss the economy in a gorgeous setting.”
I’m guessing if you say something to piss off the Fed – say you ask an untoward question at a press conference – they toss you right off the list. And don’t write an ugly news article either. Just saying.
So, judging by the sharp plunge in the equity market on Friday during Powell’s speech at Jackson Hole, there was still a strong expectation built into prices that this “pivot” was going to appear. It appears as though retail investors “Ma & Pa Kettle” had been repeatedly told by people in the financial entertainment biz that the Fed was getting ready to print money any moment now. Wolf calls this group “tightening-deniers” (Source). Instead, Powell threw a bucket of cold water on poor Ma & Pa Kettle and their bullish hopes for a near-term pivot:
Powell warns of ‘some pain’ ahead as the Fed fights to bring down inflation (Source – CNBC)
In his annual Jackson Hole, Wyoming, policy speech, Powell added that higher interest rates likely will persist “for some time. The historical record cautions strongly against prematurely loosening policy.”
The remarks come amid signs that inflation may have peaked but is not showing any marked signs of decline. Powell said the Fed will not be swayed by a month or two of data.
“The beatings will continue until morale improves.” And/or “the rate increases will continue until the shortages in energy/supply chains/labor have been addressed.” Do interest rates drive shortage-inflation? Not so much. Ok, maybe some of the inflation is money printing. But a huge chunk is an energy shortage and related “sanctions” on evil Putin. Another chunk is due to China, “Zero COVID”, and the resulting supply chain issues. Rate increases can’t possibly fix either issue.
by davefairtex 
