John Authers: Newsletter: Powell Will Need a Horror Show to Cut Again https://mail.google.com/mail/u/0/#inbox/FMfcgxwDrvGtsgdxLzJlcxQKswVjrTMM: 'Every so often, I make a good call. It’s nice when it happens. So I start by drawing your attention to... “Could this be the point when Powell tries to stake out his hawkish credentials once again, and stock market day-traders, mugs though they are, show they have at last learned to anticipate this and price it in? We will know soon enough.” It turns out that the answer was “yes”. One more good call and I can say I am right more often than a broken clock.... The Federal Open Market Committee cut its target rate for the third meeting running, and tried to give itself space not to cut again, also for the third time running.... But it still included a caveat which was enough to reassure everyone that he was no more hawkish than they had feared: “if developments emerge that are a cause for a material reassessment of our outlook, we would respond accordingly.”... A “material reassessment” would imply the Fed would need to be proved seriously wrong, which in turn would imply a recession. So we could go along with the gloriously lugubrious assessment of TS Lombard’s U.S. economist Steve Blitz: “This means it will take recessionary signals to cut and that, in turn, means they will be too late to avoid recession.” That is in line with the lesson of history... either there is a recession, or the Fed has cut as much as anyone could have hoped. Now, eat, drink and make merry...
#noted #monetarypolicy #forecasting #notebookmodernmacro #2019-10-31
