They took the president seriously!
That's all I could think of yesterday when the stock market plunged on the lunatic theory that, somehow, Jay Powell, would agree with President Trump that it's time to cut rates and when he didn't, "they"sold.
First, I have no idea who "they" is other than a couple of knuckleheads who came in and spooked the futures with some real hard blasting. There were no buyers anywhere near where stocks were and I think there was some serious disbelief among the grown-ups that anyone would really be disappointed that Powell didn't cave.
But once the selling began we then started getting all sorts of nonsense being discussed about how it looks like the rate cuts are on hold perhaps because inflationary pressures could be building.
Now I know the drill like you do: you get good numbers from the economy no matter what and anyone who thinks rates should be cut will be proven wrong. Instead the same chorus that got Jay Powell to go on a jihad against the economy and inflation at was the peak of growth and inflation will come right back and argue for more hikes. These people will never admit they were wrong when the Fed raised too fast this time or the last rate cycle. They just think that they are right even when they are wrong. Not unusual when it comes to economic judgments.
Still, that's all semantics. What matters to me is that if people really are disappointed that Powell didn't' cave to the president and they sold futures than they are truly living in a parallel and stupid universe.
Powell can't start cutting rates here. He has to wait a bit after the December hike even if there were no president nagging him.
But cut because of a tweet?
That's just insane and I am a believer that the president has every right to complain about Powell's moves. It's just that Powell has every right to do the opposite of what the president wants and don't the futures sellers know what a joke he would look like if he caved? I would sell stocks nine ways to Sunday if he caved because that would indicate we have fallen into some weird banana republic where the central bank's run by a spineless knucklehead.
So, if you are one of those who are disappointed that Powell isn't a spineless knucklehead here's my advice. Go do something else with your money. You are over your head.
You don't belong here.