Can we just stop criticizing Jay Powell based on how the Dow Jones plummeted after he talked about the Fed's quarter-point rate cut, the first in a decade?
Thursday's robust action proves that it's a fool's game to say "Powell really screwed it up," because he called the cut some mid-cycle whatever -- who remembers his language a day later?
I was willing to stick my neck out and say that you should use the decline in stocks to buy -- as we did for the charitable trust -- because I thought it was an artificial clubbing. Our market is now so thin that a couple of hedge funds with a small amount of money can crush this market with a burst of futures selling. The ripple effect from Chicago to New York is so powerful that this market's become a plaything.
How anyone can take a cue from the "action" in this market is beyond comprehension. With the averages now flying, are we going to say that Powell did it perfectly and he negotiated the Scylla of the president and the Charybdis of low unemployment perfectly with a statement about how this is a correction in the hiking process, or how it is the beginning of a rate cut cycle? Did we all go to college to get stupid? Are we that obtuse?
Look, here's what happened Wednesday. Fed chief Powell is not a dope -- my that's profound. The Scylla is a wild card of a president, who is seething and about to give Powell a new nickname, because he's not cutting a full point out of the funds rate.
Hate him or like him, he is the president of the United States, the most powerful person in the world. You do not want him tweeting, "I don't know why I appointed dumb-as-a post Powell." And, then, from now until he's fired, Powell will be known as "Post Powell."
Who needs that distraction?
Powell can't go out and say "the weakness in the economy is in manufacturing, and I have to cut rates to blunt the side effects of tariffs on China that are slowing the world down including us." But, believe me, if the president slaps tariffs on an additional $325 billion on the remaining imports from China, we will be hailing Powell as a genius, not a post.
The Charybdis? We have a red-hot employment market and a lot of indicators that are still robust. You don't get one of the biggest aggregate companies in the country talking about strong growth -- as Martin Marietta Materials CEO Ward Nye said on "Mad Money" last night -- unless there's lots of residential and commercial construction going on.
We need to be a little more sympathetic to Powell and his position, or the fix he is in. You get a strong employment number Friday, he looks like a post. We get new tariffs Monday, he looks like a genius. The man stuck his neck out in the right direction, commentators took their cue from stocks to decide that he's a post and they sold stock.
Believe me, if we had Thursday's rally after the Fed meeting, no one would say he's an awful communicator. But don't you have to at least factor Thursday's "action" into the equation if you are going to be so shortsighted as to judge him on the actions of a couple of traders selling millions of dollars in concentrated bursts that knock the market down?
Look, it's true that the betting line on when the next rate cut will occur now skews to later in the year. But so what? Those bettors have such bad records, I might be tempted to take the other side of the trade.
What matters here, in the end, is Powell cut rates and will cut 'em again if things continue to soften. He won't if they change direction.
Under what planet is that wrong? Surely it's not Earth. Stop the judging. He's doing the best he can in an impossible situation. We should all do as well as he did yesterday. He's not the great communicator, but he's no talking post either.