"Mr. Powell also sought to ease concerns in financial markets about the Fed’s gradual reduction of its holdings of Treasuries and mortgage bonds, which it bought in large quantities during the financial crisis to help bolster the economy. "
.........................
The Fed's "holdings of Treasuries and mortgage bonds, which it bought in large quantities..........."
The US Federal Reserve buys the DEBT of the US Government ...to help US out!
Thank you US Federal Reserve!
If we understood where your wealth and power came from to accomplish such great feats for our US Government, we would likely be even more great-full. Until then, we will not look behind the the curtain....
...we will not look behind the curtain....
Economic systems - got to love the magic.
Economic data is always trailing. The factors which lead to the change in the level of economic activity start to occur, they manifest gradually, subtly at first, then in weekly and monthly results, then in the reporting of those results, then there is a delay while more evidence accumulates to verify the trend, then, maybe, the Fed takes action, gradually over time.
Whatever else you may say about Trump (and there is certainly much to be said), he is a man of action. He is obviously very pro-business, but at the same time he has an agenda which will have negative effects on the economy, particularly in trade matters, also in employee costs if he can get wages up and reduce illegal alien labor, and to counteract these negatives he wants full stimulus, tax cuts and low interest rates. He wants the Fed to factor in what he wants to do and is doing, he wants them to anticipate, not react. He wants a booming economy to cushion the blows of the changes he wants to make.
There is some sense in this, but that is not the Fed role of course, and unfortunately he comes across as an egomaniacal madman, his narcissism overwhelms his message, his goal appears to be self aggrandizement, not helping people. His disrespect for America's institutions may lead to his downfall.
What the central bank needs to do is allow true price discovery to reestablish itself in the markets. The Fed endless intervention starting in 1987 has distorted the economy, encouraged reckless debt, and promoted asset bubbles while rewarding big companies over the small one.
Growth in companies that employ over 250 people has, since 1993, far exceeded those employing those under 250 people. This is a crushing example of an activist Fed backstopping the stock market and the companies listed there over Main St., small business, and entrepreneurship which has been the backbone of our economy for centuries.
1
For Goodness sakes, all any government can do is set ersonal & corporate tax rates, public services, and in every other country except America, national healthcare.
Government gets far too much credit and blame for national employment numbers. The leading factors that impact jobs are much longer term than most federal administrations.... And simply, choices made by private business.
1
Powell's job is that not hard. He can say absolutely nothing, and the market pretends he does. Of course, he is going to follow the economy as he continues to say.
But no one ever repeats his key change in policy. As usual, he came in saying his attention was on inflation. But while Bernanke talked about asset stimulus (zero interest rate and QE) to stimulate consumption by affluent stock holders, Powell included asset inflation with CPI and talked about excessive inflation in assets (a bubble). He took some air out of it with a 20% drop and doesn't want a big crash. But when traders like Kramer think the Fed is going to go for a bigger bubble now, I suspect some unpleasant surprises are coming.
Powell caved to faltering financial markets and by extension Trump. He gave the algorithms that run 80% of the markets all the fodder necessary for today's massive surge just as it appeared that equities were trying to grope for a solid bottom. No honor or true independence as far as I can detect.
2
Terrific. Yet another pawn scooped up by the most corrupt administration in U.S. history.
Since no one there needs any experience whatsoever, what's the best guess? Postmaster General? What's-his-name's job over at HUD? Secretary of Defense?
Does it matter? Gone in a couple months anyway.
So much for keeping everything nice and separate so that what's happening can't happen.
Come on Mueller.
2
The Fed is being needlessly politi-sized by Trump. These are independent economists for a reason and should remain so. The Fed is not operating at the beck and call of any chief executive. Imperfect sure, but, what is perfect in economics and attempts to guide a massive complex economy in healthy directions.
Totally agree. Except the “imperfect” part? I’d take his advice over a game show host who managed to bankrupt a casino. But maybe I’m missing something.
Memories of the approx 18% interest rate.
I believe the fed used its ability to simply raise the rate, in order to help "right wing Reagan" win the presidency (1980).
Imagine what republican hypocrites would have done if Carter had visited the fed? Don't put anything past the republican cheat machine
Electoral college, gerrymandering, tax cuts that hurt the nation but coddle the billionaires, destroy our Supreme court with their low life cronies.
We need to remove Gorsuch and Kavanaugh.
Gorsuch is an accessory after the fact, (grabbing the stolen seat from Merrick Garland. The other highly questionable character, Kavanaugh, was obviously lying to get the seat,
You wouldn't put a questionable tire on your wheelbarrow, why put Kavanugh on our supreme court !!!!
Oh,. I see, he's the republican choice, goes well with all the criminals surrounding Trump .
6
Speaking of getting real, the Fed is not the Court, and neither Justice has done anything impeachable.
A gutless coward who's kowtowed to market manipulation. The Fed's been too slow to raise rates, which are still far below normalized levels. This just fuels the irresponsible borrowing behavior of companies and consumers (not to mention governments) trying to "keep up with the Jones." It will ultimately lead to a bigger crash than experienced when Lehman imploded.
5
Advice to the Fed: don't give into dictator Trump. Employ common sense; he has none.
9
Wow, the Trump supporters were not doing well and wanted change....seems the change we get is that now everyone is brought down to the level of the Trump supporters and nobody is doing well. Must be that “misery loves company”.
1
With every slump due to Trump
Is this then a Trump bump?
Economists should rightly howl
Knowing it’s all due to Powell
Domestic and global markets need a Fed chair who is above reproach. Let's hope that Mr. Powell's implicit adjustment is not in response to the recent - and unprecedented - Trump bashing.
1
Richard Fisher, former Fed. governor from Dallas who retired two years ago, categorically stated upon his departure that the Fed lowered rates to zero and instituted four rounds of QE ($4 trillion created to buy Wall St.'s toxic securities) to jump start Wall St. in the wake of the financial meltdown. The hope was that a recovered financial sector would have a positive effect on Main St. The policy certainly helped Wall St. and job growth did follow.
But the Fed kept rates at artificially low levels for far too long. The idea that Main St. couldn't recover without ZIRP and QE policies was a fallacy. But keeping rates so low for so long acted as a narcotic to Wall St. The Fed began raising short term rates three years ago and it's nine 0.25 point rate increases over 36 months was the slowest pace of Fed rate increases in modern times.
Yet, Wall St. couldn't abide even such meager rate hikes, balking at a still historically low 2.25-2.5% range while the 10-year treasury bond plummeted from 3.25% in mid-Nov to 2.56% yesterday (before recovering to 2.65% today). We are in very serious trouble if the economy cannot function with these still very, very low rates.
As for inflation...the main drivers are services such as health insurance premiums and a myriad of other insurance type costs that have continued to skyrocket. Just look at rents, tuition, etc. By the way, Tropicana just reduced its 59 oz. container to 52 oz. albeit at the same price. That's a real 12% price increase.
5
Has any other Fed Chair been intimidated by a bully President before? I thought the Fed was outside the control of the Executive Branch and it's job was to keep a handle on the economy, not be pushed around by a man whose main business experience is multiple bankruptcies.
7
Yes, Janet Yellen kept rates artificially low for too long in keeping with President Obama's fiscal agenda. I wouldn't use the word "bully" because Fed Chairpeople are not apolitical.
1
Interest rates were held down artificially following the Great Recession. The point was to encourage business and consumer spending through very low-cost borrowing during a financial emergency. About 70 percent of the U.S. economy is based on consumer spending.
But this policy forced people into the stock market because the yield on savings accounts, CDs and the like was miniscule.
Evidence from the Fed suggests the emergency has passed. We now are facing a reckoning: How do interest rates normalize? Will they be allowed to normalize?
3
Interestingly, one effect of the shutdown to which Trump and McConell are clinging so tenaciously is that fewer reports on leading economic indicators are available. The numbers can't be verified as long as various offices remain closed. Imagine that.
7
It would be nice if the jobs number was broken down into temporary vs permanent employees to get a gauge if employment is really up or seasonal. Considering its the December report, do you really think most of them are permanent?
1
Mr. Powell and his board of governors are the experts. Mr. Trump is not and has no business interfering with the administration of the Fed. As a failed businessman, Trump knows little about economics and how to manage a national bank. That's what the Fed board of governors is for.
I trust the Fed a great deal more than Mr. Trump.
9
The Federal Reserve in a way is the world's central bank, since the US dollar is the world's only widely accepted trade currency. The US economy magically "strengthened" after the recent financial crisis is largely thanks to developing countries like China and Malaysia (manufacturing based economy) absorbing the massive amount of money printing generated by the States. Yes, someone had to pay the bill for "financial experiments", it was not just by using US tax dollars since there is apparently not enough of it to go around to even support public schools and health care.
Now these countries also have to suffer the "American First" trade policy. How can the world not go into a new recession and turmoil? It is madness. Think again when we criticized other countries for unfair trade practices or currency manipulation.
5
It is possible the economy and market are performing well in anticipation of Trump's removal.
4
Trump's chaotic leadership style with uncertain government functioning and uncertain tariffs is enough to cause economic weakness. Stock market drops remove wealth effect spending and become self-fulfilling. Trump will not change, so Powell will have less ability to normalize interest rates, which Powell should realize.
4
Talk about mixed signals. The job report was great, even over the top, which should be an inflationary signal. So now Fed Chair Powell is hinting to ease off rates?
Sincerely, Confused in Cleveland
4
Well, the wealthy, white privileged can breath a sign of relief for now. For the rest of us, this is meaningless.
9
In the US, government debt was about $US9 trillion, or 62 per cent of US GDP in 2007. Today it is approaching $US22 trillion and around 100 per cent of GDP.
China’s gross debt before the crisis was about 180 per cent of GDP. It’s now around 300 per cent.
US corporate debt is at record levels – about 46 per cent of GDP – and, according to a recent speech by Federal Reserve governor Lael Brainard has brought the ratio of corporate debt to assets close to its highest level in 20 years.
Disconcertingly, it has been firms with high levels of financial leverage, high interest expense ratios and low earnings and cash reserves that had increased their debt the most.
Moreover, lending to companies with debt of more than six times their to EBITDA is at record levels, is concentrated among hedge funds, private equity firms and other non-bank lenders and is dominated by ‘’covenant-lite’’ lending.
While regulated banks and other financial institutions are undoubtedly stronger than they were leading into the financial crisis – they hold a lot more higher quality capital and liquidity – the world is, thanks to a decade of unconventional monetary policies, leveraged to the hilt.
With the Fed now reducing the $4.5 trillion pile of Treasury bonds and mortgages it held after acquiring $3.6 trillion of securities in its quantitative easing programs – the monetary policy spigots may not have quite been completely turned off but they are being tightened.
6
@Mark The debt in 2007 was actually closer to 12 trillion as the Bush Administration deceptively choose to not add in the cost of the two wars it had waged.
If they had been honest –and they were not– this would have added another 3.5-4 trillion dollars to the debt over the seven trillion dollar figure they were acknowledging, making Bush the most spendthrift President in American history.
7
@itsmecraig You are correct. The nasty little "off balance sheet" wars do add up. :-)
4
@itsmecraig
Excellent point.
https://www.theguardian.com/commentisfree/2013/mar/11/us-public-defrauded-hidden-cost-iraq-war
The above article provides some sourcing for the very helpful information you've provided above.
It is no coincidence that the Fed started raising rates when Obama was to leave office. Either Trump policies are creating a vibrant economy or we had low rates to hide Obama's failed economic policies...or both. Like most government bureaucrats, the basis for decision-making is purely political...
1
@dave
How many government bureaucrats do you know? Also, if most decisions by bureaucrats are strictly political, I guess that would apply to the Fed raising rates during the Trump presidency. Hence, nothing to do with Trump policies. Just following your own logic.
1
@dave
How many government bureaucrats do you know?
Highly powered volatility recruits attention to the index itself. If it continues and continues to add power, at some point all the decision-making becomes about the index itself, which then becomes more and more complex with one exception: It is far easier to swing down than up as the size of the swings increases.
But the cause of this isn't the Fed, it's that people are betting on certain market moves as being immutable. In the dot.com bust it was tech stocks, in the Great Recession it was mortgage backed securities. Now it's trade with China.
Arrow's law at very minimum says all such strategies are doomed, but the market has been infatuated with them since the dawn of computer trading and especially high frequency trading, which demand high-speed decisions made with very little data -- and hence very strong assumptions.
If it keeps swinging and the swings get wider and wider it will crash. What effect that has on the greater economy is another discussion, but this part is a surety.
Trump is complaining that the Fed is raising interest rates and negatively affecting the stock market which is, in his words, "Turning me into Hoover." A reference to the President who was in office at the start of the great depression.
If Trump paid attention to history, he might realize that the cause of the depression was tariffs. His use of tariffs has had a far greater effect on stocks than anything the Fed has done.
17
Probably Trump doesn't want to meet with Powell because he will quickly show how little he knows about economics and monetary policy. Probably Trump would ask Powell to pledge his loyalty and I think Trump knows how well that went over with Comey.
Trump has said that he wants GDP growth of 4% per year which every economist will tell you will lead to runaway inflation. Past fed chairmen have shown us that keeping inflation under control is the number one job of the fed; you can't create employment if inflation is out of control. And once inflation starts spiraling out of control, it is hard to stop. I trust Powell to handle monetary policy far, far more than Trump.
4
Once we had the Greenspan put. Now we have the Powell put.
Why should 2% not be normal? High interest rates are simply a tax on the middle class and impinge on business. Monetary policy is not the only answer. Congress should step up and lead with sound Fiscal Policy.
If we need to slow down the economy, the Congress needs to be willing to raise taxes some to cool things down. We're $20 Trillion in debt and we want to slow the economy by starving the government of revenue and raising interest payments is the answer by raising interest rates? That makes no sense.
7
Finally the adults in the room are speaking up. Contrast to the response to the Donald's tweets.
1
simple, the trade war will raise prices (inflation). therefore, interest rates will have to rise.
1
@zuma
The trade war causing prices to rise is not the same as organic demand causing prices to rise.
I am just a layman, but in my opinion, raising the interest rate at the moment in time is the same as a regressive tax on the middle class.
1
Powell needs to resign.
I lost all confidence in Fed Chairman Powell two months ago when in a speech he said that he did not know why inflation was so low. Powell said that he does not know why inflation continues to remain so low given that unemployment is below 4%, and the economy continues to expand. He seemed to imply that the rate hikes were done to address expectant inflation based on the current state of the economy. He does not seem to have a clue on how a 21st century technological, globalized economy works in regard to inflation, and that's a big, big problem.
For a sitting Fed Chairman to state that he does not know why inflation is so low is like a neurosurgeon saying he does not know where in the body the brain is located. The number one thing that a Fed Chairman must know is what is driving the numbers and specifically, what is driving inflation. And, Powell says he doesn't know, yet he keeps increasing the interest rates.
If you do not know what direction you are going or what's in front of you at least take your foot off the gas. Good Grief, I miss Janet Yellen!
3
well then it looks like you want the entire Fed Reserve Board to quit as well, since it was a unanimous decision to raise rates, professor
1
@Scott. Perhaps. After all, a camel is a horse designed by committee.
1
The Fed waited too long to start raising rates and the stock market got way ahead of itself and was not prepared for a return to normalcy following the Great Recession.
If the Fed had started raising rates two years earlier (and at a slower rate) the stock market would not have overshot.
Instead, we drove to the goal as fast as possible and then applied the brakes firmly, resulting in changes that are faster than what the market is prepared to easily digest.
7
What spooks me is how this nothing-burger speech has led to over 3–percentage point growth in the S&P 500. OF COURSE the Fed is going to base its decisions on the available economic data, it's what they have always done. The animal spirits are in full swing, so everyone buckle up and stay the course.
7
I did not object to the Fed's recent interest rate hike which he explained as due to the strong economy; but I did object in this NY Times forum to his announcing future rate hikes in 2019. I felt announcing future rate hikes during 2019 was premature, baseless, unjustified and counter productive. I am so glad that the Federal reserve will do its due diligence and carefully consider any rate hikes in 2019 and not announce possible further rate increases until he is ready to do so on firm and solid reasoning.
3
The problem isn't the Fed. Reality is that every economic expansion will run out of steam and there will be a bear market; and remember that what everyone is responding too is a market sell-off.
The economy is weakening because of 1) President Stupid and his idiot trade war artificially raising prices and weakening sales, and 2) President Stupid and his idiotic government shutdown all because of "the wall," his imaginary phallic symbol of power.
26
@Bob Woods. Economic expansions and bull markets do not die of old age. Economic expansions do not run out of steam, they die for real reasons. The banking fiasco killed our last economic expansion for example, not because the economy ran out of steam.
The Fed put is very much alive and not going anywhere.
2
Irrational as ever, investors are excited to hear the Fed intends to keep doing thier job. Meanwhile, the real problem remains: Donald Trump. His chaos is on track to crash the world economy this year. It sounds irrational, but he's fully capable and there are no grown-ups left in the White House.
8
The USA economy is hot.
China's economy is slowing because of sanctions.
Powel is listening to Trump , like the rest of the globe.
You reading and posting here are being led by Trump
All is well.
Enjoy your life instead of the constant hatred.
1
@Joe Paper Your world view is quite distorted. We are NOT the haters. We hate Trump because he is a hateful person hell bent on spreading his hate around the world. We need somebody in power who spreads peace and love ... at least not actively spread and encourage hate and resentment.
3
Mr. Powell, please stay the course. Don't be fooled or bullied by anyone.
Help save our Republic.
20
@lftash "Save us Obi-Wan! You're our only hope."-Princess Leia(Star Wars)
"Flash! Flash! I love you but you only have mintues to save the Earth!"-Flash Gordon(As Flash by Queen plays)
It is being disrupted, only a blind and deaf person does not see the cause. Can the Fed impeach the buffoon?
3
The Fed wants to calm investors. How lovely for the investor class.
While their fevered brows are being soothed, what is the Fed, or anyone, doing for the majority of Americans -- the underpaid part-timers with no benefits?
The investor class has been awash with liquidity since the 2008 recession, when banks, after bailout, corporations and wealthy individuals began sitting on their bucks, not even verging on R and D, jobs retraining for a future replete with robotics, or dipping their toes in renewable energy.
Investors do not help the American people. They love their cash more than the humans, animals and the environment of their world.
That's their right. But why is the Fed catering to just the extremely wealthy? Part of their mandate is to ensure full employment.
With a 62% labor participation rate -- that means 38% of people above age 16, not including retirees, who want to work, can't find jobs.
This does fly in the face of a 3.9% unemployment rate, but, the U.S. government has a quirky definition for "employed" -- if you work one hour for pay during the government's monthly employment survey, you are employed! Hence, the skewed statistic.
When not waving giant palm fans over jittery investors, what is the Fed doing to ensure full-time employment for all who want it? It's part of their mandate.
22
@Lilou
You have no understanding of the "investor class." We are not billionaires or millionaires necessarily but thousandaires who rely on investments to make up for the income we lost when we lost our jobs in the Great Recession.
I am now at a job that pays two-thirds of what I once earned and for which I have twice as much work. I have to take on freelance assignments and dip into investments to make a modest middle-class lifestyle feasible.
My lifestyle supports a host of other people. That's what the investor class does. It's not as cushy as it seems. -- thegamesmenplay.com
17
@Lilou
Spoken like a true socialist who does not understand that the vast majority of Americans are "investors" via 401k plans, homes, bank accounts and more. So we all have a stake in the markets and interest rates.
Don't fear capitalism's volatilities. Embrace its possibilities!
3
@GG--my remarks were targeted at those richer than you, but you still have a middle class lifestyle and the ability to support others. You are lucky, certainly luckier than the 38% who want to work snd can't find jobs.
1
Of course the Fed will change course if necessary, that is their job.The bigger question is how much leverage the Fed has if & when there is a recession. Is 2.5% enough "cushion" to drop rates if the economy goes to 0% growth? They may think not.
7
I think FED should stay in the background and make decision based on the data. FED should be a data driven FED, not a market driven FED.
A transparent FED is not the same as a people's FED, which is the last semi-government organization that shouldn't be influenced by the politicians including the president. The president may think about 2020 election and want to change FED's mind to his favor. And many politicians may think about 2020 re-election in a rosy stock market. But how about the working class who don't watch stock performance like a hawk, and are less influenced by the stock market performance. I wish FED just keep quite on what they will be doing.
3
Thank goodness Trump's job/wage data was enough to counterbalance Powell's mouth.
Is this guy being paid off to crush the economy?
3
Stocks surged 3.5% today after Powell’s speech so not sure why you say he’s crushing the economy.
1
we're all gambling with house money at this point anyway--long may the roller coaster ride continue
1
Maybe credit default swaps will be the panacea.
1
Finally! Someone stands up to Trump publicly!
Fed Chair Powell is well within his rights to finally speak up and forcefully. Most experts expect a recession, probably this year. The Fed must get away from the zero lower bound so it can lower interest rates again in a recession.
The other thing that must happen, and it probably won't in a split Congress, is shoring up the IRS so that real money can flow into the Treasury again. As it is, those who are supposed to pay the most taxes are avoiding them and the understaffed IRS is unable (unwilling under Trump) to collect monies it is owed, according to analyses that appeared in late December in The Atlantic and other publications.
We are being robbed and run aground.
---
Things Trump Did While You Weren’t Looking [2019]
https://wp.me/p2KJ3H-3h2
41
@Rima Regas Excellent point you make about the need for the fed to raise rates while the economy is strong so that the fed can lower them the next time the economy is in a recession. Thanks.
4
Rima Regas:
If you were right about a recession this year, the absolute wrong thing for the Fed to do would be to raise interest rates. They don’t need to raise rates now just to be able to lower them later. They have other tools besides interest rates, such as Quantitative Easing, to increase liquidity and stimulate the economy monetarily. In addition, there is also fiscal stimulus.
1
So part of our problem, he says, is that trade wars, which are supposed to be "good and easy to win," are threatening the global (and the U.S.) economy. Another reason for Trump to be mad at Powell.
10
Think about this: Our economy is driven by hard working people, mostly doing back braking, not particularly interesting work, who make disproportionately less money, then the sanctimonious leaders in charge of their financial fate who live privileged comfortable lives by comparison. Our President, our Fed Chief- the list is long- sit sipping their coffee, in a warm home, waiting for the crush of rush hour to pass while making decisions on the poor working who they depend on to produce for them- THEN have the audacity to manipulate by putting the brakes on what they consider "an over heated economy"- short for the average working wage is starting to go up(very little to their's). And that they claim creates the danger of inflation, full employment- wage pressure. Bla- Bla- Bla.. Shame on these self righteous, and many pious insensitive leaders that have completely lost touch with their humanity. Their not leaders of a fair Democracy- their spoiled and ignorant.. no matter what ivy league college they went to or private clubs they are apart of. Tragic.
13
@Anonymous Don't confuse a strong economy with income distribution and a lack of worker bargaining power. Monetary policy doesn't guide where the money goes. A significant portion of the working class have voted for politicians who in turn reduced worker's power.
1
Gosh I sure hope they would (isn’t this —like— normal standard operating procedure at the Fed?)
3
The only path we need to shift is removing Donald Trump, his wife, and family from the White House.
56
@Bruce Savin
Interesting how Melania is typically left out of "the family". Trump was whining that he was not with his 'family' over the holidays but Melania was at the White House with him. Since when is a wife not considered part of the family?
4
@Betty When is a wife not part of the family? I guess when she doesn't want to have anything to do with her husband.
3
Powell sounded all the right notes this time; he's looking at the stock market, willing to shift direction, and he won't knuckle under to political pressure from the ignoramus in the Oval Office. Hopefully, his balanced and calm presentation will help calm the roiled markets. Now, if only Trump will stop Tweeting and learn how to negotiate deals with China and the Democrarts in the House, the market could take a breath and, perhaps, resume it's upward trajectory. I know I can count on Powell, but counting on Trump is a fools errand.
13
Well said, the market responds directly to what the Fed says, perhaps more than what they do. Recent comments should be a balm to a skittish market. Now if we could only get the guy in the White House to remain silent, things might balance out.@ricard j. brenner
This strategy is reasonable and positive for the economy. Now if we could only get Trump to resist both speaking and tweeting we might actually have a week with normal volatility, rather than needing a barf bag to look at your retirement savings balance.
7
The last of the Mohegans - Federal Reserve Chairman, Jerome H. Powell. But I hope his firm "No" stays, " I will not resign. " Period. All the adults in this Administration are gone. All our cherished institutions have been insulted and their leaders humiliated including our Justice System. The Federal Reserve is one of the last which has not been politicized. Let's hope it stays that way!
65
It's not too high inflation, but too low wages and salaries that should be The Fed's focus. Through inadequate compensation, workers have been funding their employers since the Ronald McDonald presidency. This continued through 8 years of Bill, who managed to bring down the debt run up by Ronald. W ran it right back up, handing O the Second Republican Depression. "Great Recession" my eye. Now here's yet another Republican who's doing everything he can to benefit the wealthy corporations and individuals, at the expense of our economy and our working Americans. Is it not high time we broke this cycle by putting money in workers' pockets? Most of us are in such bad shape that it will take years for us to pay off our debts and engage in significant consumer spending which might trigger inflation.
1
It should be crystal clear to everyone by now that stock prices are fictional things.
Uber being worth more than a billion dollars!
Apple dropping 69 billion dollars in one day!
These are not "value" based movements they are manipulations of markets based on what the manipulators know of those who are running the markets. No stock price should move on the story about anything but factual tangible changes in the process of making and selling the product/s involved.
But silly me I think out markets should be building things here in the US to make us stable and well off first instead of trying to maximize profits in China or elsewhere.
1
@magicisnotreal
They are public companies. Investors own a part of the company.
Stock prices presage events.
Markets plummet before recessions nit during or after
The market is telling us about the deep-state, Powell and Pelosi. All of whom are toxic
1
@James
The market is reacting to the Twitter nut in the White House. It had one of its WORST years in 2018. Trump and his ‘acting’ Cabinet are the toxic danger. I hope Pelosi can keep him in check - perhaps give him a new toy, just not one costing $5 billion++
3
@James Right, and "trade wars are easy to win" and Not-My-President's cozying up to the world's tyrant dictators and surrounding himself with Russian 'agents' and lacking any ability OR interest to get along with any knowledgable advisors and lying hourly about everything and selling our nation's precious natural resources, not to mention our democracy, to the highest bidder and giving televised rambling proof of his mental instability . . . isn't highly "toxic"??
The Fed is acting reasonably especially with a portion of the nation and certainly POTUS who live in a party today, ignore the future manner, it is good to see stability and sense in the Fed. In good times, the Fed's responsibility is to help manage growth and conditions to help the US to pay down debt and be able to raise interest rates responsibly so that there is room to adjust those rates down in economic tough times. More leaders in Congress and other agencies need to maturely and confidently use the word "NO" with regards to the direct and indirect whims and emotions of POTUS.
4
@Jon
Why were fed rates 0% until Obama was ready to leave office and then were raised recklessly, causing a loss of $6 trillion in equity? Why does the stock market plunge every time Powell makes an announcement? How does raising interest rates on public debt help us to pay it down?
More people in Washington need to say "Yes" to President Trump.
@James
That’s funny. You think people saying ‘no’ to Trump is the problem. Very funny if it wasn’t so scary.But let’s go your way. Say ‘yes’ to Trump how?
He said “Build a wall and Mexico will pay for it”, Okay, ‘Yes, start building as soon as the check clears’. It’s still a dumb idea but if Mexico will pay, ok ‘yes’.
He said ‘Trade wars are easy’ ok, ‘yes, show us how’. So far, the trade war bluster has hurt our farmers, our manufacturers and our consumers. Oh, he must have meant ‘Easy for me, hard for everyone else’.
He said the tax bill would hurt him, help the middle class and not raise the deficit. So far the rich are paying millions less and the deficit has spiraled up. None of my middle class friends have seen much benefit and most are worried Republicans will go after SS and Medicare to bring spending down. Is it hurting Trump - who knows, he hasn’t shown us his tax returns (another thing he said he would do).
He said he wouldn’t blame Democrats for the shutdown - so everyone in Washington should say ‘yes’ to that. Except Trump now blames Democrats. See the confusion.
Tough to say ‘yes’ to Trump even for Trump.
5
@Maxie
Point-by-point
1) The wall. He's requesting 0.1% of the federal budget, for a wall. It worked in Israel. Your check clears remark is childish and petty.
2) Trade wars. We've been in trade wars for decades. It's just that Trump is the first president to actually fight back. Look at the trade deficit. Look at the onerous conditions that China and India set.
3) The tax cut. Unemployment is at historic lows. Wages are growing faster than at any time during the Obama admin. We have 4% growth. All this despite the rate hikes
4) SS and medicare will go bankrupt. Doesn't matter who is in Washington. I'd suggest planning appropriately. Put as much in your retirement as humanly possible and if you won't retire in 5 years, invest in stocks. Don't expect the government to come to your rescue, when the Socialists gain power, the feds will go bankrupt. Happens each and every time.
5) The rich are paying millions less. OK, then start a business and become wealthy. I know immigrants who came here with a few hundred dollars and the American Dream and now have 10's of millions. Jealousy is unbecoming. It's the old story, a capitalist has a rich neighbor and wants to be rich like her. A socialist with a rich neighbor, wants the neighbor to be poor like her
6) He blamed the Democrats. Who cares? Like I said, we are quibbling over 0.1% of the federal budget. I'd suggest not paying attention. The "you said" games are for 2-year olds.
I hope you are no longer confused
Wow. If just the prospect of a 0.25% rate increase sends the stock market into a dive (in spite of a strong economy), I'd say
"the market" has no real legs to stand on. Fictitious profits, fictitious losses.
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@M. Imberti The market has always reacted this way to the Fed increasing or decreasing rates. There is nothing unusual or unstable about this kind of response, especially given other geopolitical factors that are impacting markets e.g. trade wars.
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"The fundamental mission of the Federal Reserve System is to foster the stability, integrity and efficiency of the nation's monetary, financial and payment systems in order to promote optimal macroeconomic performance."
So why did Fed Chair Powell say, "We're listening sensitively to the messages markets are sending?" Why doesn't Powell stick to the Fed's mission statement and stop trying to protect stock market investors.
If the Fed is going to ignore its mission statement, why not protect people who save the traditional way, in a bank, for a change. After 10 years of protecting the stock market with interest rates near zero, many savers have seen their savings disappear.
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@Jack Edwards
Nonsense. Read the mission statement again, especially that last part.
Money talks, and when people flee from stocks, chances are, something is wrong. I think the fed is starting to recognize they are raising rates too late in this bull market, and to continue to do so, will accelerate us into a recession. In the past few months, housing markets have cooled and inflation hasn't really been a problem. They need to rethink their policy at the fed, so this is good news.
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But let me be clear, we're still planning to raise rates 3 times in 2019.
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"They're well ahead of the data" Powell says of the markets. If that were true we wouldn't have had any of the past recessions. If they had even the slightest idea of what will happen the markets wouldn't fluctuate thousands of points a day. If car prices fluctuated by thousands of dollars a day I would not visit that dealership. Let's face it, It's not the data that concerns them, it's the twitta.
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So, let me get this straight. President Obama takes the helm from W. who tanked the economy and over 8 years brings the economy back from the brink of one of the worse economic downturns in history. He hands the reins to Trump, who in turns takes a roaring economy and slams the breaks on it by slapping on tariffs on just about everything, deeply hurting American companies and workers in the process, this in turn starts spooking investors.
Meanwhile, Powell, who is supposed to be working independently from the White House is making educated decisions regarding the health of the economy, like making adjustments and increasing rates, which in turns enrages Trump and he begins his torrent of whines and ridicule of Powell on twitter; Trump lets it be known in the media that he wants to fire Powell.
Then, Trump begins and orders a government shut down and continues his tariffs on just about everything at this point; many tariffs take effect on products beginning this month. So, investors continue to be spooked, meanwhile 800,000 American workers are without pay due to the Trump Shutdown, and Powell, who sees the markets dipping because of Trump's tariff war and government shutdown and his fear that Trump will fire him then back steps on the health of the economy and promises to make adjustments again, but in the opposite direction, all to appease his tyrannical mad king boss.
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Fear not, investors, no need now to feel bound to trust in the measly US for monetary security now that NASA has just discovered UltimaThule only twenty billion miles from here. That’s where all the smart money should be on because it’s conjoined solid rocks.
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@John Doe
Goldman Sachs has already purchased the rights to the larger rock and has an exclusive option on the other. They are accepting deposits, ($5 million min.) in their Ultima-Thule real estate mutual fund.
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@Ralph Averill, wouldn’t it be embarrassing if they turn out to be specks of dust on the camera lens. Even a bigger hoax than empty collateral debt obligations.
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Powell was the villain on CNBC yesterday as the DOW dropped 660 points today. Today the Labor Dept. announced 320,000 were added. So Powell seems to be under less pressure. The travails of Apple and the China trade war were used as a catalyst to proclaim a recession is at hand.
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Mr. Powell DO NOT GIVE THE ROBBER BARONS FREE MONEY.
That is what got us into this mess, along with no serious regulation.
Let it crash. Do not bail them out. Let the "chips" fall where they may. After all, the markets are nothing but craps tables and it's time for the "house' to come down to earth.
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@njglea
I take it you don't like the current system which has evolved to its present state. We got a strong economy and a strong (non political) Fed. If you don't trust banks advocate for stronger regulations that govern them.
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@njglea The Fed handles monetary policy, raising and lowering the interest rate at which banks borrow money which, in turn, raises and lowers the rate at which people and businesses borrow money.
The Fed does not regulate banks nor is it involved in decisions to bail out banks. You can thank Republican lawmakers in Congress for gutting banking regulations and therefore putting us back in the position where financial institutions can take on great risk and put our economy and jobs at great risk.
I felt blessed when I got a 15% rate in 1983 to save my company. Free money doesn't save bad policy.
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@northlander I remember 17% mortgage rate in 1980.
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So do I. We got one of the last ten percent mortgages in 1979. Had to put thirty percent down on the house too. I laugh when people complain about mortgage rates and down payments today. They've got it easy.
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“People should know that the Fed has a very strong culture around nonpolitical activity,... it’s not a fragile one, it’s not being disrupted”
There could be no more clear indictment of the turmoil that the Trump administration has brought to the economy and that which is yet to come.
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Fed Chair is willing to help Trump with his disastrously chaotic trade war and threats. Isn't that what Trump was aiming for?
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So Powell won’t be bullied by Trump. How refreshing. Nice to know there’s at least one important government official who has some backbone.
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Unemployment is incredibly low
4th quarter retail very strong
Housing weak but only a couple of % of economy
Consumer debt and therefore capacity - low with ample spending capacity
Inflation low but wage pressure growing
Risk to economy?
Not the Fed which is responding to the dual mandate of inflation and employment (they are not responsible for asset prices)
Single Risk - Trump - trade wars, destabilizing gov policies, impact on foreign gov and international growth
He is exacerbating things by a horrific immigration policy which is destroying Brand America and our very strong need for highly skilled immigration
His destabilizing policies are perversely driving a stronger dollar
If Trump would end trade war+be quiet = strong economy+strong stock market
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@Chris - agree, trades wars are not football games, the only trade wars with winners are the ones that are prevented from happening.
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Companies resist new hires until they are forced to so it is the last in the chain of economic expansion and layoffs the first in economic decline. With the trump trade war, a rather dramatic drop in housing and drop in manufacturing these are three elements ahead of the curve. Brace for a recession.
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@Steve
Brace for a recession is right - just wait until the "little guy" sees what happens with his/her taxes this year, thanks to last year's tax gift to corporations/1%.
Belts will be tightening.
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Excellent, in other words the Fed will do exactly what they are supposed to do. They will raise or lower rates as warrented without coercion from people who know far less - or let's say - a person.
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