Powell reappointment is trading back at an all-time low, Brainard at a new high.
The Fed really screwed this up and it is going to hurt Powell and the institution badly.
A thread to explain
1/9
@greg_ip @ctorresreporter @steveliesman @mckonomy @vtg2 @NickTimiraos
The Fed really screwed this up and it is going to hurt Powell and the institution badly.
A thread to explain
1/9
@greg_ip @ctorresreporter @steveliesman @mckonomy @vtg2 @NickTimiraos
First, I've known Rich Clarida for years and he really is a good/decent person. I believe that he might be the victim or poor timing on his trades rather than something sinister like insider trading.
But, this is DC and Rich wanted to play.
2/9
But, this is DC and Rich wanted to play.
2/9
The Fed knew his disclosure statement was bad. That is why the released it late on a Friday.
Confirming it was bad is Powell getting reappointed took a big hit this weekend.
Powell traded near 80% before the Clarida disclosure Fri PM and, as of this writing, he is 61%.
3/9
Confirming it was bad is Powell getting reappointed took a big hit this weekend.
Powell traded near 80% before the Clarida disclosure Fri PM and, as of this writing, he is 61%.
3/9
But maybe something more was going on here. The orange dots are the dates of Clarida public speeches. The blue line is a measure of inflation expectations.
Clarida was a regular speaking until mid-May. Since this he has given just one speech, back on Aug 4.
4/9
Clarida was a regular speaking until mid-May. Since this he has given just one speech, back on Aug 4.
4/9
Rich is a big believer of inflation expectations so I thought he entered a version of witness protection because he was more hawkish and did not want to fight "transitory."
Now I'm wondering if they were hiding him because they knew of this bad news. Not good!
5/9
Now I'm wondering if they were hiding him because they knew of this bad news. Not good!
5/9
Rich should have resigned before his disclosure came out. Hiding was not the answer.
If he was self-muzzling because he is worried about inflation, and not his disclosure, and did not want to fight "transitory" that also should of led him to resign.
6/9
If he was self-muzzling because he is worried about inflation, and not his disclosure, and did not want to fight "transitory" that also should of led him to resign.
6/9
The Fed has to stop managing this, they need to clean house.
This includes Richmond Fed Pres Barkin sitting on millions of corp bonds (bought before 2020) and then voting to bail out the corp bond market. Another very bad look the Fed cannot/should not manage.
7/9
This includes Richmond Fed Pres Barkin sitting on millions of corp bonds (bought before 2020) and then voting to bail out the corp bond market. Another very bad look the Fed cannot/should not manage.
7/9
All of this is killing Powell and the Fed. Powell needs to clean house.
Then Powell needs to go through senior Fed staff disclosures and force them out too where necessary.
Again, they all decided to play in DC, these are the rules in that town.
8/9
Then Powell needs to go through senior Fed staff disclosures and force them out too where necessary.
Again, they all decided to play in DC, these are the rules in that town.
8/9
Until this housing cleaning occurs, the credibility of the Fed and Powell sinks by the day.
9/9
9/9
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