Papa Powell and the Narrative Fallacy

By Charlie Bilello

“My purpose is to make my narrative as truthful as possible.” -George Armstrong Custer

Nothing like a huge rally in a month’s time to make everyone stop talking about a recession.

Remember that December collapse?  Felt like so long ago given just how violent the upswing has been since.  The end of 2018 was dominated by prognosticators saying a recession was imminent, or already underway.  Strangely enough, no one seems to be saying any of that now.

What changed?  One thing and one thing only: price.  At the end of the day, always remember that price dictates emotions, emotions dictate narrative, and narrative results in poor decision making.  Now I know that nearly everyone sees the unleashing of dovishness from Fed Chair “Papa” Powell as the reason for equities closing out the month of January so strong.  But none of this should be a surprise whatsoever given just how severely flat the yield curve has gotten as the Fed has hiked short-term rates.  Nor should it be a surprise whatsoever when inflation expectations have been in a solid downtrend since the middle of last year, largely due to Oil prices faltering.

Continue reading Papa Powell and the Narrative Fallacy

Once a Caver, Always a Caver

By Kevin Muir

Remember the Powell of last year? You know, the one that tried to convince us that there “could be no macroeconomic stability without financial stability?” And this Powell was not concerned about financial stability in terms of making sure the stock market never went down, but rather just the opposite. On June 20th, 2018 Powell brought to our attention that;

Continue reading Once a Caver, Always a Caver

Breaking Bottom: S&P 500 Down 15% Since September As The Fed Grinch Speaks

By Anthony B. Sanders

SMART Money Flow Index Keeps Tanking

The S&P 500 Index extended its drop since September to almost 15 percent on Wednesday, barreling through its February intraday low and leaving the equity benchmark about 162 points from its first bear market in a decade. The chief culprit: Federal Reserve Chairman Jerome Powell’s indication that market volatility has done little to change the central bank’s rate path or to alter efforts to reduce its balance sheet.

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The SMART Money Flow Index continues to fall as The Fed Grinch keeps talking.

Continue reading Breaking Bottom: S&P 500 Down 15% Since September As The Fed Grinch Speaks