It’s Showtime for Jay Powell

Fed Chairman Jay Powell will speak in a couple of minutes and this will set the tone for stocks for the rest of the week–most likely it will be a ‘euphoric’ type rise in stocks.

Bonds will likely drift lower yet as Powell will set a more dovish tone.

We would like to watch the markets react over the course of the next hour, but instead we have to head out into a modest snow storm in central Minnesota and do a little work that buys the groceries.

7 thoughts on “It’s Showtime for Jay Powell”

  1. Two questions: 1. If Powell is sounding like he’s willing to let the rate increase slide (for now), why are my traditional preferreds getting beat up by the market? I would have expected the opposite. Bought more KIMprM today and promptly saw the price slide.
    2. Tim, what do you drive? Just curious as I use a 4 wheel drive capable Honda Pilot here in New Jersey and probably don’t see anywhere near the messy conditions you people in Minnesota get. Wouldn’t be without 4 wheel drive.

    1. It takes time for the preferreds to recover. Also, don’t forget there are going to be some increases in the near future, like the 25BPs expected in Dec 2018.

    2. Hi Jerseyvinny—good question on the preferreds getting beat up–I understand your concern well. I think we have seen a lot of ‘tossing the baby out with the bath water’ with common stocks getting hammered–sentiment may shift a bit now and we may see the preferred get back the 25 or 50 cents lost recently.

      We drive Acura TL’s–2 of them–both white–very boring. We have driven these for years. The way it works here is my wife decides she needs something newer and by then my car is pretty old and maybe has 250,000 miles–so I get her old car and get rid of mine. We will have to change our ways now though as the TL is no longer made–and my wife thinks the TLX model feels cheap. We have talked a SUV for me but never pulled the trigger–we are cheap (thrifty) and always pay cash for our used vehicles we buy–the decent SUVs are usually more than we want to pay. Thus far we have mostly stayed out of the ditch.

      1. Re buying used vs new cars. When first married we bought used as a typical 2 year old car was selling for half the new car price but had way more than half its life remaining. Can’t find that any more so now we buy new with cash and hold our cars a long time. My Honda Pilot SUV is a 2004 model and my wife’s Honda Accord sedan is a 2009. Both of us are retired so we don’t rack up a lot of miles. I don’t use the 4 wheel drive feature often but wouldn’t own an SUV without it. I hate getting stuck in snow. The Northeast is hilly which adds to the difficulty of driving in snow.

  2. Powell’s blinkin.. market soaring, dollar down, rates down.. “corporate debt” high/ comments on comm r/e .. interesting he commented on those as most pundits have also been quite concerned in recent comments.. careful on those roads Tim.

    1. Thanks Bea–I drive very defensively believe me–to the consternation of those wanting to drive 70.

    2. This is not good news, it’s GREAT news.

      To me, it’s not a question of whether he stands his ground or blinks. Let him follow the data. Right now economic growth is good (not too hot) and with the Fed December increase (the actual move to neutral), wewill have a Fed rate running slightly ahead of CPI and below PCE inflator.

      Let’s see where the data takes us next year

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