The markets and economists have vastly different views on the balance sheet and the path for rate hikes. This is a problem.... Read More
Jerome Powell finally broke his streak of negative stock returns on FOMC days.... Read More
Since crude oil is such an integral part of inflation expectations and Fed policy, maybe Trump should consider Continental Resources Chairman Harold Hamm for a Fed Governor seat.... Read More
The Fed gave the market what it wanted by suggesting the rate hike cycle is over and that they are open to adjusting the balance sheet's reductions.... Read More
FOMC statements continue to get shorter and easier to understand. According to the Flesch-Kincaid grade level test, readers don't even need a high school diploma to understand yesterday's statement.... Read More
A look at the Fed's holdings of Treasury and agency securities by maturity... Read More
Will the Fed formally use the words Powell carefully read on January 4 ... "flexible and patience?" If so, this could account for "half a move." No hike at the next meeting unless they drop these words. It's inclusion also means the Fed still wants to hike, just quibbling about the timing.... Read More
The Fed and the markets continue to hold different opinions on the impact of balance sheet reductions.... Read More
The Fed and the markets have held different views on the importance of balance sheet reductions. A recent Wall Street Journal story suggests Powell is ready to discuss the matter in a more public manner to get a better feel for where the markets stand on the issue.... Read More
The Fed was laughing all the way into the crisis. When the crisis hit in 2008 and things got serious, laughs at the FOMC meetings all but disappeared.... Read More
Economic data often gives very little evidence of impending recessions, leading to a poor forecasting record among economists.... Read More
The Fed wanted the balance sheet to be on automatic pilot because they thought it had little impact on monetary policy. The market thought otherwise and the funding markets rates might be showing how.... Read More
Prior to Friday's comments, Powell and the markets were on different pages concerning FOMC policy. However, Powell's comments were taken as a change in policy. For now, the rate hike cycle is over.... Read More
We believe the stock market?s rally since Wednesday can be attributed in large part to a belief that the Fed is done hiking. Tomorrow, Powell will be the first Fed official to speak since December 21. If he pushes back on this notion in any way, it will not sit well with the stock market.... Read More
Considering nobody knows exactly how the economy and markets will react to reductions in the Fed's balance sheet, terms like "automatic pilot" should be removed from the Fed's lexicon. The markets fear that QT, combined with the Fed's projections for two more rate hikes in 2019, could prove to be too much for the economy to handle.... Read More
Yesterday the markets reacted strongly to Powell's comments on the balance sheet.... Read More
FOMC statements in the Powell era remain short and to the point.... Read More
Jim appeared on CNBC yesterday afternoon and discussed the Federal Reserve. ... Read More
Wall Street is having a tough time determining how large the Fed's SOMA portfolio will be at the conclusion of quantitative tightening. Likewise, estimates vary on how much accomodation is being removed via balance sheet reduction.... Read More
The Fed is expected to hike next week, but some uncertainty exists. Assuming they raise rates, only one further hike is priced in for the rest of 2019.... Read More