It’s time to turn around and see the darkness that the Fed sees looming over you. Earnings season is already extending signs of recession with the first corporate reports coming in far darker than expectations that were already twilight dim in FactSet’s estimations, which pegged earnings as likely to show a 2% contraction.
Even the Fed sees problems ahead. Jerome Powell’s speech to congress has been called “one of the most dovish Fed speeches ever!” While that quickened the heart of a sugar-hungry stock market, what does it really tell you about how soon or likely the Fed sees recession looming for the economy or sees trouble for the stock market? Why else would Father Fed suddenly become the “most dovish … ever?” Does the Fed become its “most dovish … ever” when the economy and the stock market are doing great?
Father Fed tried to explain the sudden change this way:
“We’re learning that interest rates — that the neutral interest rate — is lower than we had thought and I think we’re learning that the natural rate of unemployment is lower than we thought,” [Powell] said. “So monetary policy hasn’t been as accommodative as we had thought.”
Hmm, they’ve been doing this for a hundred years, and they’re just now figuring out where the neutral position is for the one control they use the most? And everyone reporting on Powell’s testimonies accepts that explanation without question???
Read the rest here: The Great Recession