Powell’s confession

Oh my god! You guys are too nasty and difficult to be satisfied!! What do you really want me to do to make you happy?? I thought I have done everything you are looking for. But again, you make me embarrassed and losing face. For 9 times out of the total 11 post-meeting conferences since I took over the FED Chair position, you guys knocked me down almost immediately as soon as I started to talk. So depressing and I really don’t know how to talk to you guys without changing your mood so suddenly!

I hope you guys can really understand what kind of position I’m having. Although I seem to be the most powerful man in the financial world, I’m really sitting in a hot, very hot chair, which is making me excruciatingly miserable and mortifying. As you may know, I’m walking on the very thin ice and I keep hearing the frightening sound from the cracking ice beneath me whenever I start to amble. It is really kind of unnerving sensation if you have ever sit in my chair. I honestly wish I could switch my position with yours now. On one hand, I really don’t see the need to cut the rate with the current economy momentum and I was even thinking to raise it as you all know well. But the bloody Trump keeps nagging at me, so much so that I cannot just ignore him without doing something to at least try to please him a bit. Nevertheless on the surface, I have to try to show my neutrality without being bullied by the political pressure, especially the niggling and atrocious Trump!  That’s why at the Wed conference, I deliberately said that this was not the start of the lengthy rate cut cycle. Sadly, you guys couldn’t understand me and immediately dropped 400 points for the Dow as your reaction. My God! You are really too foolish to think that this would be the only rate cut for this year. If you know me well, I will always be very responsive and attentive to your mood and reaction and for sure more rate cuts will be on the way. In reality, as soon as we start the rate cut journey, we can hardly stop the motion within a very short period of time. After all, the world as a whole is on the slippery slope and virtually all the major countries have gone negative in their interests. How can we keep positive in such kind of environment!  I guess the monstrous Trump, although horrendous rhetorically, indeed has a good point, if we want to keep the momentum for the US economy! I finally get that and will surely do my best to continue to meet your needs with your full satisfaction.

Here is my beg, folks, please leave me alone and give me some breath room! Just ignore what I say and I will doggedly deliver what you guys want! No kidding!!!

Yours sincerely

Jerome H. Powell

2 August 2019

Well, a pretty depressing and miserable Powell, right? Probably more so for those who were chasing the market before the Fed rate decision. In the following 2 days, 100+ points were lost for S&P and VIX jumped by about 50%! As I said, my crystal ball is pretty good in telling me what is coming and it is a great week for me by betting for higher volatility and lower stocks. A lot of damage has been done for the market in terms of its TA and don’t try to bet for a quick recovery. Having said that, in the very near term, i.e. next week or so, there is a good chance the market will rebound. Actually I was even expecting a full reversal today. The market didn’t to that although recovered by half. More impressive is the quick receding of the volatility (VIX) from as high as 20 to close below 18, and still declining post-hours. I’m now betting for some dead cat bounce next week with VIX to quickly retreat again, which will probably lure a lot FOMOs into the game of chasing highs. So that’s my game plan for next week to go long first and then short later.