What are guys opinion on this?
Will Trump be able to fire Powell? Don’t know the details of the law but Bloomberg wrote that the laws are a bit ambiguous regarding the POTUS’s ability to fire Powell.
I dunno but I’m super mad at Powell!!!
It’s ludicrous that he thinks he has this sort of power
So it’s Powell’s fault? This vol has nothing to do with Trump.
look, no one here is going to defend trump on this (okay maybe a few will) but did Powell really need to raise?? Market rates are falling anyways.
fed chief should be independent from the us pres. because us prez will always want perma low rates/easy money to pump the economy/market. fed chief needs to be able to slow down markets if things look bubblicious. low rates rewards risk taking. increase rates. kill the overlevered and the inefficient.
Who do you think should appoint the Federal Reserve Chairman then, as the President has an incentive to favor Dovish people? Should responsibility fall to some kind of body with long term incentive that outlasts the economic cycle?
Most people on this board are businessmen with our own front-line experiences. For me, it is hard to square Powell’s view with what I am seeing and hearing from customers and contacts. Things are slowing, confidence is turning, and people are getting bearish across all geographies. I really thought Powell would take a wait and see approach with both rates and balance sheet wind-down. What was the harm in waiting, an inflation spike? Seems unlikely since other than Apple no one seems to have any pricing power. To some degree, I think the moron president drumpf pushed Powell into a corner and forced him to stand up as an independent.
thats exactly what my pops was saying too
Powell is seeing exactly what I’m seeing across our businesses and the economic data
The problem with the current situation is that Trump is putting the hammer down on Powell and Powell can’t make it look like he is making decisions based on Trump’s pressure/opinion. It would look as Fed would not be independent. Powell needs to raise rates to make a point. But I’m not saying that Powell is raising rates to despise Trump but he certainly is in a very awkward situation if he doesn’t want to raise rates.
The problem is that Trump doesn’t understand how the FOMC works. Powell is the chair, but that doesn’t mean he’s the king. The FOMC votes, with powell only having 1/12 of the voting power. If powell is out then that doesn’t necessarily mean the Fed will significantly change. That and Trump specifically picked Powell who’s been a hawk and surprising only few, continues to be a hawk.
Powell, along with the other voting FOMC members, are supposed to ignore Trump. Projecting an image of independence is not important at all compared to making the right decisions with regards to open market purchases and policy guidance. No matter what Trump says, it is unlikely that the public will form an opinion on the Federal Reserve such that it hinders their work, or even understand what the committee does. If the Fed ignores market signals and contributes to a recession at the end of 2019, it will be entirely their fault.
No, no it won’t be. A recession could be triggered by things such as: a trade war, the president getting indicted/impeached, or a government shutdown. None of those things could be handled by the Fed. The Fed has been following their dot-plot for the most part. So either a 25 bp deviation is the cause of a recession, or it’s due to something else.
I think there is a lot of chicken and egg problems with the Fed. They are a glorified buyside shop with some proprietary data, large market moves, and a lot of hype. But does the economy make the fed act or does the fed make the economy act?
I’m with Ohai. Dot plot or not, Fed should be data dependent and data is softening. Any talk about hiking to appear one thing or another is stupid. All it does is make Trump look right when the markets and several leading minds like Gundlach call the hike a mistake. Allows him to place blame in one place. Any halfwit would just do their job, look at the data and make the best call, not get caught up in playing optics.
Anybody digging into the actual weighted impact of any tariff action on the economy vs a rate move across the entire financial, real estate and capital goods markets (plus stronger dollar on mfg) would not make such a blase statement about 25 bps since it’s clearly about expectations. It’s about whether the Fed’s view of the data aligns with the broader market’s and right now, the market is saying it doesn’t.
Fed is not fully liable for a recession, but will be liable to a partial extent if their policy or communications undermine confidence or causes another negative effect. Yes, the President is being over political, and there is a lot of hard-to-interpret stuff going on in the world. However, if the Fed responds in the wrong way to these stimuli, they alone are responsible for the particular mistake. Why do people act like the Fed cannot do wrong? They are just some humans who don’t have better information than any other economist body.
I don’t think many people think they can’t do wrong. To me consensus is the reverse. People think they are more powerful than they actually are
there hasnt been a recession in 10 years. seriously been the longest expansionary period ever. if not now when? perma low rates is what fueled this asset bubble. its time to take it up a notch.