Predicting anything is usually the first step to proving said prediction will not come to fruition. So with that said, here are my thoughts:
I was watching Mr. Powell’s opening remarks in regards to his appearance before the House Financial Services Committee this morning. Once again the political aspect in regards to the Fed and its Chair was put on full display.
Regardless of what side of the political aisle or viewpoint one holds. The Fed is suppose to be an Apolitical type institution. However, when it comes to recent events, it appears it is anything but the further time marches on.
I found it amusing that some of the very first questions or statements to Mr. Powell from members of the Democratic side of the aisle were about whether or not Mr. Powell would resign if the President asked.
His answer, once again, was just a wee-bit too-cute-by-half in both his delivery and his demeanor from my observation. But there was one that really caught my attention.
About 30 minutes into the proceedings one of the members, once again, emphatically asked if Mr. Powell would resign if asked. It was more of a rhetorical type of question, because what followed was more or less a clarifying statement of some insinuating guarantee that they (Democrat members) would “Have his back” should the circumstances warrant.
His (Mr. Powell’s) response was what caught my eye.
On camera he is seen in what appears to be both smiling and affirming to someone on his right (I’ll guess a staffer) the same type of impression that Sally Fields once gave when receiving an award. i.e., (paraphrasing) “They like me, they truly like me!”
Yes, this is an over the top reference. But the reason why I believe it fits is because bankers, especially people in the position of Mr. Powell, are supposed to appear, at all times, stoic in appearance. i.e., neither happy, sad or amused. Just dead pan. (think Greenspan who was the epitome of such.) Anything other and its far too notable, hence why I use the reference.
Regardless of how one feels about the current president or others of any administration, what I’m pointing out is that maybe Mr. Powell would be better served by reviewing a few of the older recordings of one of his predecessors (e.g., Mr. Bernanke) and see just how much said party will embrace Mr. Powell should he not tow their “advisement” for Fed policy should they desire to give it.
My prediction is this: Should the Fed disappoint the “market” in any way, shape, manner or form that causes a sudden reversal of fortunes? In other words: major unrelenting sell off?
It won’t be the President calling for Mr. Powell’s resignation – it will be Mr. Powell begging for it, or offering it himself. Why?
Because the President already has the “blame game” in his pocket. It’s been signed, sealed and delivered via the Fed and its own actions and words of the last two years. He can (and will) beat that drum into the elections every-time there is any wavering in the “markets.” He can just sit back and point a finger.
But then that would leave the other side to do, what? Here’s a possible hint of what may come should the severity of any fall become chaotic.
The now assumed BFF of the other side of the aisle will be the first to take all that “got your back” type praise – and use it for their own bulls-eye of where to put the forthcoming knives. Because in an election year, when it comes to the economy, one thing’s for certain:
No politician is going to allow any blame of a faltering “market” or economy to reside at their polling doorstep. Any politician, regardless of affiliation. Period.
Mr. Powell will be faced with both sides of the aisle pointing fingers – and the populace calling for heads to roll: Any!
And if you think there isn’t any past examples for what I’m saying (as in how politicians view how the Fed should be run and by whom.) I would remind both Mr. Powell and anyone else to not forget this exchange between then Chair Mr. Bernanke and Sen. Schumer. aka “Get To Work” Mr. Chairman” moment, 7 years ago this month.
As always, we shall see.
© 2019 Mark St.Cyr