Both Powell and Q-Anon on hot seats

New Fed chief Jay Powell ends his first two-day meeting with a press conference Wednesday.

The market has a 90% expectation for a 0.25% rise in Fed Funds Rate to 1.5%-1.25% range. More importantly is Powell’s comments on the economy. Since the Fed is the 800-lbs gorilla in the government bond market, I don’t expect anything sensational coming from his comments.

Any policy changes will be on the edges as traders parse the statement for future moves.

The key to the statement is whether there would be 3 or 4 hikes this year. Powell in Congressional testimony has been perhaps overly optimistic on the economy.

I am on the record saying there will only be this hike for 2018, as Corporate America is addicted to cheap money to pump up share prices by borrowing cash to fund stock buybacks.

The steeping of yield curve — while very good for bank profits if they ramp up lending — increases current borrowing costs at a time of greater issuance to fund corporate tax breaks.

The Austin, Texas bomber killed himself in an explosion this Wednesday morning after a shootout with the police and FBI.

Interesting Q-Anon posted last night that the FBI opened a file on the entity because of the use of BOOMs in his posts and a possible connection to the bomber.

Q-Anon says it’s a ruse to cut off communications, but it will fail.


Phantom inflation will see a Fed do one and done in ’18

Since Jan. 26th more than 2,100 points have come off the Dow using Thurs. closing price. Dow futures suggest another 200 points at the open, but it’s early.

Across that same time frame, bitcoin has remained flat, down roughly $150, with much churn along the way. Continue reading

Mr. Powell, did the Fed bail out failing hedge funds last month?

New Fed chief Jerry Powell is set to testify Thursday in front of the Senate Finance Committee. In his Tuesday session in the House, Powell hinted that four rate hikes may be needed this year.

I believe today’s discussion will sound more like what I predicted the House testimony should have sounded like.

My big question to Powell would be can he explain what happen early last month where the Fed’s weekly balance sheet reports exploded by $14 billion during the market turmoil surrounding the VIX volatility spike.

From all indications I see, it looks as if the Fed did a three-day QE4 operation in conjunction with the Plunge Protection Team, to buy up toxic VIX short instruments that were way out of the money before some hedge funds would have been forced to liquidate and shutter.

Gun maker shares are falling sharply this morning after President Trump said he was in favor of restricting sales to minors and the mentally ill following the Florida school shooting last week.

In an abrupt reversal from the previous decade where firearm shares would soar on news of a mass shooting for fear of legislation, share prices fell after the Florida shooting.

Now with a Republican leader saying he is open to curtailing some gun sales, shares are nearing 52-week lows on the news.

The Fed’s $14B bazooka bailed out stocks three weeks ago

Earlier this month, on the morning of Feb. 7th, I wrote about their being something rotten in the markets.

The day prior the Dow Jones index moved 1,167 points intraday. I wrote at the time the Plunge Protection Team’s fingerprints were all over the move. Continue reading

New Fed sheriff will not show all his cards

New Federal Reserve Chairman Jerome Powell is scheduled to give his first views of the economy Tuesday to House Finance Committee. He then will speak to the Senate panel on Thursday.

While Wall Street analysts do not expect much in the way of policy changes from ex-Fed head Janet Yellen, I have to say that’s conflicted thought — hoping for calm. Continue reading