Stock market investors, hungry for more pork, are demanding Fed Chair, Jerome Powell, land on their table on a silver platter with an apple in his mouth at this week’s congressional hearings. Will he deliver? Powell has a thin red line to talk, or this overFed market, which he and is cronies have nurtured, dies this week from its own morbid obesity. On the other hand, if he does what they want, it’s a major blow for Fed independence. Powell proves he is the market’s slave, and he bows to President Trump.
A tough trend to break
Receiving delivery of the Powell pork is the only way the market will punch through the enduring ceiling shown in the chart below. If Powell walks a tight line perfectly in congress this week, the market will impatiently await his delivery of pork bellies at the end of the month. If he looks like he’s trying to create wiggle room to walk away from rate cuts that the market has perceived as a promise, the wiggly little pig is going to get his bacon burned along with his porcine friends on Wall Street.
As you can see below, the upwardly soaring trend of the Trump Rally in late 2016 and all of 2017 lost all of it potency on January, 2018, when I said it would because Powell’s Great Recovery Rewind doubled down on the Fed’s rate of monetary tightening. You can also easily see how the market really fell to pieces when tightening got up to full speed at the end of September, 2018, at exactly the moment Powell announced the Fed’s rewind would continue at full speed on autopilot for the foreseeable future.
Read the rest here: The Great Recession