Warsh-It (2)

Gesundheit.  Whatever you thought of the new FOMC Chair's performance today, the market sneezed enough to flip the daily bias to lower with a close on the daily ES futures below the 18-day SMA, filling a daily gap in the ES futures in the process. This condition needs to be monitored as to whether the new up (green) fractal is taken out before the down (red) fractal or vice-versa.

ES Futures - Daily - Bias Down

I've seen a lot of corporate CEO types come & go. I've worked for some. Yea. They always start with "what a great team we have here", and "things are gonna change beginning now". And, when they don't know what to do so immediately, they typically create lots of committees to 'study things'. 

As the reporter said at the press conference, "if you were serious about cutting inflation, you would have raised rates today." He didn't. He listened to his other peers who likely told him, "You're gonna have a bad enough market reaction just saying you're serious about inflation without the rate hike. Raise rates too and you're going to see real problems".

Instead, he let his jawboning both take the edge off some assets and raise rates over in the bond market too.

And, ironically, he said he needed a task force to "study" the reason for inflation. Meanwhile, everyone on the committee and in the room is snortle-chuckling thinking, "uh, don't we create inflation by printing money and destroying the value of the dollar? We need a task force for this, huh?"

And, when asked whether financial conditions were easy or tight, he rightly answered, "well, they are certainly different in the housing market than elsewhere." Boom, chacka boom. And what organization was it that raised interest rates from 0.25 to 5.25% in a couple of years? Oh. Meanwhile, his speech today raised interest rates marginally on the longer ends of the curve: the end of the curve housing depends on.

So, all-in-all, it's a "kick-the-can-down-the-road" performance, just as many of Jerry's later ones were. Of course, the three blind mice (Bernanke, Yellen & Powell) weren't really blind, except to inflation. They just knew if they stopped printing money, then asset prices might fall. Meanwhile, prices at the imaginary Grocery have just about doubled (i.e. 100% inflation). And, the Grocery is only imaginary because it's not counted in "Core PCE". I don't know about you, I think they just about have the "core" backwards. I need to count on food & energy the most, right after shelter, so it shouldn't be excluded from anything.

But, when you make decision by committee, this is what you get. Committees are fine except you have to watch out for a committee's natural tendencies to 1) be too polite, 2) water things down too much, 3) stall and ask for more time, 4) ignore the more vocal - and usually the more correct members - because for some reason, they seem to have a temper. When, really, the answers are simple - just painful to implement. And no one wants the pain.

Have an excellent start to the evening,

TraderJoe