FRB Chair Powell’s speech broke little new ground. Powell commented about the conflict of the Fed’s dual mandate (downside risks to employment and upside risks to inflation). As noted last week, Powell stated for now the labor market risks are paramount, which is why the Fed eased policy.
Powell characterized the current stance of policy as “modestly” restrictive, which the market interpreted like someone prepared not to slash rates aggressively. He also repeated the observation that it will take some time for the “one off” price boosts from tariffs to fully pass through.
The Fed Chief also addressed some of the intervention from the White House stating the challenges of “maintaining public trust in economic and political institutions is paramount.”
President Trump also spoke yesterday. In his address to the UN, no new ground was broken, reiterating the US will no longer be dumping ground for all the world’s products. It is however believed it was the first time in a global setting that Trump explicitly stated globalism is dead.
Moroeve the President declared the redistribution of wealth from the western democracies to lesser developed countries (i.e. any country other than the US) under the guise of climate change and equity is over, a distribution that has made a few extremely wealthy.
An argument can be made the President is only a symptom of the change or global reset that is occurring, a change that is naturally occurring for a myriad of reasons commencing in 2008 [Great Financial Crisis] accelerated in 2013 [China adopting its Belts and Roads initiative] and went on steroids in 2020 [COVID].
Speaking of change, both Poland and the US warned Russia that its jet would be shot down if they again breach NATO airspace.
Commenting on the markets, the NASDAQ came under some profit taking as Powell offered no hints on whether he might support a rat cut at the October meeting. Treasuries had a muted response.
What will happen today?
Last night the foreign markets were mixed. London was down 0.22%, Paris down 0.76% and Frankfurt down 0.12%. China was up 0.83%, Japan up 0.30% and Hang Seng up 1.37%.
Futures are flat. The 10-year is off 4/32 to yield 4.12%.
