As Federal Reserve Chairman Powell spoke to the public at the virtual Jackson Hole conference, I wondered if he might admit that the Fed had wildly underestimated inflation and he now saw the need to taper ‘emergency’ money printing. The market was set to hear that as it was prepositioned to be short the US dollar, long Treasury bonds, and disinterested in gold. While the vast majority in the recent Bank of America Money Manager survey think inflation is transitory, inflation is here and is a fact. Using a 3-month annualized rate (to remove base effects), the Fed’s favorite inflation measure – Core PCE – is up at a near-40 year high, at 6.7%. Instead, Powell, who never saw this level of inflation coming, selectively congratulated the Fed on meeting their never-elucidated inflation objective and pressed on with zero interest rates and $120 Billion of…

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