Jackson Hole

[tsptalk]

Here’s what Powell could say at Jackson Hole to soothe the roller coaster markets

With interest rates making historic moves globally, the pressure is on Fed Chair Jerome Powell to clarify the Fed’s intention when it comes to interest rate cuts.

Markets want to know whether the Fed is in a serious longer-term cutting cycle, or just planning a few cuts as an insurance policy against an economic downturn.

Powell’s speech at Jackson Hole next Friday is expected to be the main event of the week, and is expected to be a tough communications challenge for the Fed chair.

https://www.cnbc.com/2019/08/16/her...ay-at-jackson-hole-to-soothe-the-markets.html

 

[TommyIV]

Powell's position is tough. Market players are greedy for more rate cuts despite those rate cuts possibly being more useful down the road. The Fed has obviously has a finite number of rate cuts to use and has taken three years to build to their current position. Investors and the President seam eager for them to throw the rate cuts away as quickly as possible as if that would not send the signal that a recession is imminent. But currently consumer numbers are strong and stocks are really not far off the highs.

The Fed's job should not be to move stock prices higher to satisfy current stock holders, but rather to keep the economy at a healthy growth and keep assets, such as stocks, from outrunning the economy to create potentially devastating bubbles. I sympathize with Jerome Powell and think his greatest problem is his inability to communicate reality without spooking investors and dealing with temper tantrums of those who don't want this remarkable year of gains to end; but the future health of the economy should be more important.

 

[userque]

Powell's position is tough. Market players are greedy for more rate cuts despite those rate cuts possibly being more useful down the road. The Fed has obviously has a finite number of rate cuts to use and has taken three years to build to their current position. Investors and the President seam eager for them to throw the rate cuts away as quickly as possible as if that would not send the signal that a recession is imminent. But currently consumer numbers are strong and stocks are really not far off the highs.

The Fed's job should not be to move stock prices higher to satisfy current stock holders, but rather to keep the economy at a healthy growth and keep assets, such as stocks, from outrunning the economy to create potentially devastating bubbles. I sympathize with Jerome Powell and think his greatest problem is his inability to communicate reality without spooking investors and dealing with temper tantrums of those who don't want this remarkable year of gains to end; but the future health of the economy should be more important.

Amazing how so many non-economic-scholars seem to think they're the smartest in the room with regard to economics.

Even more bigly amazing is that anyone would even listen to them.

 

[pmaloney]

Agreed, I don't usually care what they say. I focus on the reaction to what they say, and occasionally why they said it.
Even though I respect Tommy IV's opinion I think that with the rest of the world in recession and even in negative interest rates we are in a great position to give them a profitable trade.
However, I don't see why our rates should be so high. Wouldn't it be better to reduce rates to give the world a good fair trade rather than a really good comparative deal? :smile:

 

[userque]

LOL ... ok ... just to be clear, I wasn't referring to TommyIV.

TommyIV has been a breath of fresh air! ... so far

I was referring to TV armchair experts slash politicians that-want-you-to-believe-that-they-are-economic-scholars.

 

[userque]

Agreed, I don't usually care what they say. I focus on the reaction to what they say, and occasionally why they said it. ...

This is smart!

 

[pmaloney]

We are definitely in agreement on TommyIV but what about the proposal that our keeping rates so high gives the world a good reason to buy and does it need to be such a great deal for the rest of the world (or for us)? Metal on metal. Just curious about your opinion. :smile:

 

[userque]

We are definitely in agreement on TommyIV but what about the proposal that our keeping rates so high gives the world a good reason to buy and does it need to be such a great deal for the rest of the world (or for us)? Metal on metal. Just curious about your opinion. :smile:

I'm one of those "non-economic-scholars" I mentioned earlier. That said, I believe that global economics is a vast and complex system of hundreds (or thousands) of known and unknown factors; interacting in even more known and unknown relationships.

I also believe that economic professionals and scholars use complex models to analyse and forecast economic data/factors.

So, as a result, I believe there are certainly more than a few factors/variables involved with any economic question/discussion.

Having a meaningful economic discussion among laypersons is like having a meaning discussion about microneurosurgery among those same laypersons.

That said, here's a point by point analysis of TommyIV's post, from my perspective, in blue. Please feel free to let us know exactly which points you find problematic:

"Powell's position is tough.

This is an opinion and can't be right or wrong. Also, "tough" is a characterization whose meaning will vary from person to person. However, I agree.

Market players are greedy for more rate cuts despite those rate cuts possibly being more useful down the road.

Again, opinions that I agree with.

The Fed has obviously has a finite number of rate cuts to use and has taken three years to build to their current position.

Facts (I did not confirm, however).

Investors and the President seam eager for them to throw the rate cuts away as quickly as possible as if that would not send the signal that a recession is imminent.

Opinions that I agree with.

But currently consumer numbers are strong and stocks are really not far off the highs.

Fact and opinion. I agree.

The Fed's job should not be to move stock prices higher to satisfy current stock holders, but rather to keep the economy at a healthy growth and keep assets, such as stocks, from outrunning the economy to create potentially devastating bubbles.

Fact, I believe. I believe the Fed's duty is to the economy primarily. And my opinion is: healthy economy, and the markets will follow. Excessive market manipulation and lead to unhealthy bubbles.

I sympathize with Jerome Powell and think his greatest problem is his inability to communicate reality without spooking investors and dealing with temper tantrums of those who don't want this remarkable year of gains to end;

Opinions. I don't sympathize with him. Just like Super Chicken, he knew the job was dangerous when he took it. I agree that communication is problematic. However, that's not his fault (and TommyIV never implied it was); under-educated market participants are to blame there. And he certainly isn't to blame for others in high offices, having temper tantrums.

but the future health of the economy should be more important."

Opinion I agree with.

"As iron sharpens iron..."

 

[tsptalk]

Powell says there’s no ‘rulebook’ for trade war, pledges to ‘act as appropriate’ to sustain economy

KEY POINTS

Federal Reserve Chairman Jerome Powell says the global economic outlook “has been deteriorating.”
In his annual remarks at Jackson Hole, he again pledged to “act as appropriate to sustain the expansion,” a key phrase he has used before and has prompted positive market reaction.

He spoke at length about tariffs, saying there is no “rulebook” on trade wars and that the Fed may have to “look through” short-range developments.

But Powell also says the “economy is close to both goals” of price stability and full employment.

https://www.cnbc.com/2019/08/23/powell-jackson-hole-speech.html

 

[pmaloney]

Thanks for your well considered reply. I read the beginning lines just as the market tanked yesterday which is why it took me so long to reply. I agree with everything you have said although a lot of people seem to think the last two rate hikes and Powell's comments of more to come were too much and too quick. The one thing I agree most with, is that global economics is extremely complicated with so many variables and a layman like me, with no education in economics has no insight into these issues but asking questions is the best way I know to learn. Thanks again for your reply. :smile:

 

[userque]

Thanks for your well considered reply. I read the beginning lines just as the market tanked yesterday which is why it took me so long to reply. I agree with everything you have said although a lot of people seem to think the last two rate hikes and Powell's comments of more to come were too much and too quick. The one thing I agree most with, is that global economics is extremely complicated with so many variables and a layman like me, with no education in economics has no insight into these issues but asking questions is the best way I know to learn. Thanks again for your reply. :smile:

My response was delayed as well. As we both illustrate, real life gets in the way sometimes no biggie.

"a lot of people seem to think the last two rate hikes and Powell's comments of more to come were too much and too quick."

Yes, people that talk loudly, and people that merely and ignorantly parrot their favorite loud-talkers because the talk tickled their ear, tend to dominate the internet, but aren't not necessarily qualified in the subject-matter, and/or may have ulterior motives (political).

Ask and answer for yourself ... "What do the majority of scholars say?": https://scholar.google.com/

We are both layman. I can't give a definite, reliable answer to the question you originally asked. Even The Fed itself is split.

But I believe if a topic means enough to me, I can study/read for several weeks/months and come to conclusions on my own.

I'd probably start with that link I posted above. IMO, most won't do that kind of work, many aren't capable (everyone can't grasp every concept), and most would rather just parrot others (who are also parroting) as I mentioned above.

Truth is, I'm not that interested...regardless as to how much it dominates the news/internet. If I were truly interested, I would have been interested in the topic long before it became popular and scandalized. I've never been a believer in bandwagon hopping.

I'm more interested in watching the show, and not being a part of it.

opcorn:

P.S. I really appreciate the civil discourse. We need more of it in this country. Enjoy your weekend!