We need to talk about new Fed chairman Jerome Powell. Wall Street really doesn’t like the guy. Just about every time he makes a public appearance, stocks react in a majorly negative way. But here’s my take: it’s not Powell that Wall Street doesn’t like. Rather, it’s just the monetary policy he might bring with him that has investors so spooked.
It’s important to remember that Powell doesn’t control core consumer pricing. Powell doesn’t dictate employment stats. The Fed had already signaled rate hikes this year — he was doing his job in communicating the Fed’s plans to Congress this week.
After Ben Bernanke implemented quantitative easing during the crisis, it didn’t matter who was in charge of the Fed at this point. He or she would have the unpleasant task of reigning in the American economy before it overheated.
By the end of QE action, the Fed wound up with a $4.5 trillion balance sheet and interest rates near zero. That made sense when the economy was in the dumps, but it certainly isn’t anymore.
In an economy this strong — and one signaled to only grow stronger per Powell’s comments – it doesn’t make sense to have interest rates this low.
So the interest rate hikes are coming. That’s that. If you’re blaming Jerome Powell for your losses last week, you could be one of the dumbest on Wall Street.
More from Kinsey Grant:
Subscribe to TheStreetTV on YouTube:
For more content from TheStreet
Follow TheStreet on Twitter:
Like TheStreet on Facebook:
Follow TheStreet on LinkedIn:
Follow TheStreet on Google+
source
