It’s not too difficult to figure this stuff out once you realize the stock market is not the real economy and Jerome Powell doesn’t give a shit about your gambling habits, which is why the market is throwing a fit today. But if you watch CNBC or Bloomberg TV all day, your perception of reality might be a bit skewed.
So why did Jerome Powell tell Wall Street to take a hike? It wasn’t inflation fears (it’s below the 2% Fed target), or the need to find some “balance” as some spokesmodels on financial TV are suggesting. Powell can also care less what years of zero rates did to average people in this country–first responders, teachers, grocery clerks, etc. and how quantitative easing (QE) devastated pensions plans (Read THIS and THIS) by reducing rates and depressing returns for people who depended on fixed-income.
It has nothing to do with any of these things. Powell simply stared into the abyss and saw nothing but a barren landscape of debt and financial calamity. How else do you explain a terminal rate of 2.75% for 2019? He knows the day of reckoning is coming and the Fed is out of options because they are holding the biggest bag of shit in the history of capitalism. To top it all off, he was appointed by a man who loves tax cuts, tariffs and deregulation and who thinks the stock market cares about his tweets. That is it. Nothing more. The Fed isn’t coming to the rescue.