Powell Lights Stocks on Fire Because Economy Is Crashing
It's economic arson.
Fed Chair Jerome Powell sent stocks skyrocketing back up to the moon today by saying the economy was doing poorly, so he might have to cut interest rates. There is nothing the modern stock market loves so much as a crash into cash. A poor or faltering economy has always meant the Fed will run to the rescue by creating more money. Of course, if the Fed does that this time—whether the stock market or the Fedheads are too dumb to realize it or just want to burn the ramshackle economy to the ground-they’ll be hosing gasoline straight into the already rising flames of inflation.
That’ll be fun!
Powell the pyrotechnician.
Whoohoo! We’re going to have a bonfire! And we’re going to light it right beside this rickety building and then pump gasoline on it. No, make that rocket fuel … and lots of it. It’s time to send stocks to the moon again! All aboard! Climb on the stupid train.
The 'risks to inflation are tilted to the upside, and risks to employment to the downside' may 'warrant adjusting our policy stance' Powell said.
Powell’s hint that interest rates could be cut more than expected sent Wall Street soaring.
Bad tilt, if it happens—to tilt toward solving a crumbling economy by hosing it down with the money pumps right when you admit tariffs are lighting inflation back on fire. Do you want some rip-roaring stagflation as the flames of inflation ascend back to where they were right after the pandemic and maybe even higher? If you do, then hose it down with more easy Fed fuel. That way you can enable the government to build Debt Mountain higher, too.
Powell justified this on the basis that 401(k)s need a thriving stock market. As a result …
The tech-heavy Nasdaq surged nearly two percent and the S&P 500 rose 1.4 percent on Powell's remarks.
Just what we need when stocks are clearly overvalued and starting to come down in a relatively controlled manner because MIT just reported more than 95% of AI companies—just like dot-coms back in roaring 2000s—haven’t returned a dime in profits, which was what sent tech stocks down from their irrational levels in a reasonably moderate rate of decline.
So, rather than just deal with that reality, here’s Powells possible solution: Get that bubble re-inflating now!
According to JPow …
A rising stock market benefits Americans’ retirement accounts, including 401(k)s and IRAs, which are heavily invested in indices such as the S&P 500, Dow Jones, and Nasdaq.
Yeah, sure, and a bubble stock market is exactly what crashed those 401(k)s that people believed were going to provide for their retirement all into the dust in mere months, too. That’s what happened in the dot-com bust; that is what will happen now.
So, stocks rocketed up like power bubbles on J-Pow’s rocket-fuel:
Wall Street, which saw the market dip from record highs over the past week, is now hoping that Powell and the rest of the Fed's Open Market Committee will vote for a quarter point cut at the next meeting in September.
Way to inflame the insanity, Powell, you total moron!
The headlines took off predictably from such a statement at the much-watched symposium in Wyoming:
Jerome Powell's speech in Jackson Hole paves the way for a September rate cut,' Paul Stanley, chief investment officer, Granite Bay Wealth Management said.
So, tariffs will create shortages and the tax will get passed along to consumers as rising production costs ALWAYS do eventually; then cheap Powell plunder will empower consumers to keep consuming, driving shortages up at a faster clip as the cheap money empowers people to get tariff-limited resources but even perhaps to consume more like they did with Fed funds in the Covidcrisis.
Sounds like Powell has decided the way through the current chaos is to power through. Hit the mud, and hammer the throttle, even if the mud is made of dirt and gasoline this time.
Once gain, Powell is betting the new inflation will be transitory: (MORON!)
Powell also remarked that although tariffs were starting to have a real effect on consumer prices it is possible that it could be a more short-lived shock rather than prolonged increase.
I spelled out in this week’s early Deeper Dive numerous reasons this inflation will not be short-lived. But Powell is an idiot. So, here we go again! Morons with matches and infinite fuel in a time of widespread wildfires.
Listen to his brain fart out fuel pellets:
'We cannot take the stability of inflation expectations for granted. Come what may, we will not allow a one-time increase in the price level to become an ongoing inflation problem.'
That doesn’t even make sense! If you are not going to take stability in inflation for granted, why would you—“come what may,” as in “regardless of what damage we may cause”—decide that today’s inflation is a one-time increase that is possibly going to be short-lived and NOT going to become an ongoing inflation problem? It certainly became one the last time you said that. Do you never learn a thing? Why would you even entertain the hope that wit will be a one-time bump that will automatically stabilize? When you made that dumb assumption last time, it was because you believed inflation was related to supply shocks that you believed would self-correct over a few months after Covid lockdowns were lifted. So, you kept pumping inflation higher with your fuel.
"The effects of tariffs on consumer prices are now clearly visible. We expect those effects to accumulate over coming months, with high uncertainty about timing and amounts," Powell said.
"The question that matters for monetary policy is whether these price increases are likely to materially raise the risk of an ongoing inflation problem. A reasonable base case is that the effects will be relatively short-lived—a one-time shift in the price level. Of course, 'one-time' does not mean 'all at once.'
It won’t be short-lived if you pour gasoline on the rising flames like you kept doing into the last “transitory” inflation for far too long.
"It will continue to take time for tariff increases to work their way through supply chains and distribution networks. Moreover, tariff rates continue to evolve, potentially prolonging the adjustment process."
Those have been my arguments, particularly in my Deeper Dives. So, based on your own words, why would you “take the stability of inflation expectations for granted” and assume the longer-term trend that has been in place will cause inflation to destabilize if you throw more fuel on it right when it wants to rise just from the tariffs? Are you that dumb? You just threw fuel on it with that statement. Bond rates immediately plummeted, and interest rates are pegged on those.
Powell cautioned that it is possible the "upward pressure on prices from tariffs could spur a more lasting inflation dynamic, and that is a risk to be assessed and managed."
Well, then I wouldn’t be leaning into adding fuel right now … just when the superheated stock market started to show a little rational cooling!
For months Trump has pressured Powell to cut rates, threatened to fire him, appoint a shadow chair and even harangued him over the cost of improvements to the Fed's offices.
Sounds like it is working.
UNLESS, PCE, the measure of inflation the Fed goes by, suddenly knocks Powell in the head and stuns him into realizing inflation may be hot in its most sticky areas, he sounds like he may prefer the risk of hyperinflation to the self-correction of a WAY-overzealous, dot-com-bust stock market that he helped inflate with his earlier rocket fuel that went out in search of storage bunkers and found that storage in the stock market.
As a result of Powell’s words today …
The S&P 500 jumped 1.4 percent and erased all of its loss for the week. That's following five straight modest losses after it set an all-time high last week.
Nice job getting the flames back up to the top, Powell! I love it when the fire trucks hook up to the fuel storage tanks at the neighboring gas station for their water supply!
Let’s hope PCE pops Powell on the head so hard he dare not even think about re-inflating the bubbles the Fed has already blown up in recent years. Sound’s like he’s itching for a ride on the STUPID train.
