Last week’s observed bearish engulfing has so far proved a non-event as the markets continue to reach maximum stupid heights lifted by Jerome Powell’s recent soothing remarks to the nation on 60 Minutes.
The trouble is, so much of what Powell said in that interview just isn’t true.
He claimed the US economy was in a great place pre-coronavirus. The claim completely ignores the repo market rescue the Fed has been engaged in since September, in which it has been forced to provide hundreds of $billions to keep overnight repos functioning.
Even more duplicitous, Powell advised against worrying about the massive increase in $trillions of new debt the country is taking on right now. In his words, once covid-19 infections become contained, the country will return to growth and adopt a fiscally prudent program of paying down the debt.
What?? Powell knows first-hand this will never happen. He’s just not being honest with us here.
After all, he took over the reins at the Federal Reserve to preside over the unwinding of the Fed’s balance sheet, which had ballooned from $800 billion in 2008 to $4.4 trillion ten years later. But when he attempted to reduce the Fed’s holdings (aka, quantitative “tightening”), the market threw a hissy fit and Powell quickly capitulated.
He realized that today’s asset prices have become so dependent central bank support that ANY kind of tightening of monetary policy threatens to kill the markets.
by thc0655 
