"Making equities go up isn't their only job."
Here's an argument I have heard every time I have ever criticized the Fed. Thanks to Twitter (TWTR) I have the criticism in real time.
The first riposte to that, of course, is that I don't even want them to target equities. That's silly. And a misunderstanding entirely of what I am about.
I do want them to listen to the markets. I have been saying for months that there could be a real rout in the stock market because it is forecasting a downturn and real trouble.
Of course for that prediction I get the usual "the stock market has forecast nine of the last five recessions."
Again, that's a trite and non-rigorous false dichotomy. I am not saying there will be a recession, I am saying that we will have an unnecessary run in the stock market because there isn't enough liquidity to handle the "go out," the great unwinding of ETF investments coupled with hedge fund liquidations.
But then I hear that I am stoking the Trump rants about how the Fed needs to be held more accountable.
Again, false dichotomy. Despite some wags on Twitter, President Trump doesn't watch me or even care what I have to say from that I can tell and there is no conversation other than on air with Larry Kudlow, director of the National Economic Council. I do my own work. I wonder whether Trump knows he is making Jerome Powell's job harder. I know from being a judge on the Apprentice he loves to fire people. So that could be more of animus than people realize.
Anyway, the bottom line is that I had a good handle on what would happen if Powell screwed up the Fed's statement and the presser and he did both. Now we are in the midst of what is an unprecedented bear market where stocks are falling on almost no volume -- almost all of it programmatic-and it is happening in a way that will be very destructive to wealth and definitely set back the hiring growth.
In the end, the Fed wins.
But what does it win?