Posts Tagged ‘ QT ’

The Powell Put is Struck Lower

December 27, 2018
The Powell Put is Struck Lower

In spectacular fashion, over the past few weeks, stark reminders emerged on how fast confidence unravels in the midst of a slowdown, particularly so, when the slowdown is doused with policy response errors. A conflux of negatives compounded to send US financial markets into bear market territory, ultimately, calling into question the economic expansion since 2009. What happened? What started with a run of the mill correction, due to slowdown fears,¬†turned into¬†an all out rout in risk assets. The economy and financial system is more fragile than previously perceived. Since the financial crisis, an implicit “fed put” has cushioned the downside of every economic slowdown, and market pullback. The thought process goes something like: every time something bad happens, the fed will accommodate, so why purchase downside protection (a...

Read more »