SVET Daily (Powell speech at Wednesday, Nov 30)

01 Dec 2022 by rate3

Wednesday, Nov 30 we have seen NASDAQ rebounding spectacularly on the Powell's speech, going from 11K to 11450 - 4 percent rise - in a matter of minutes, something we haven't seen for quite a while.

BTC followed but with much lesser vigor - from 16800 to 17200 (2.3 percent), which, again, demonstrates that free, global, 24/7 markets absorb sudden price volatility better than the regulated ones.

What agitated markets was this Powell's line: " ... it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting."

The theme of Powell's evocation named "Inflation and Labor Market" seems a self-apologizing with its focus on the core CPI. What Powell means is that because the major cause of inflation - food and energy prices - is out of his personal controls, he intends to do the maximum harm to the least responsible but the most vulnerable markets participants - private investors and consumers.

In his speech Powell spent 80 percent of the time trying to prove to the public that home owners / builders hiking rents / materials prices as well as new retires, who became too wealthy to seek a second job, are more-than-partially responsible for the continuing inflation and the tightening labor market.

According to Powell, we, stupid, greedy peoples - not the crazy government's monetary policies and unsubstantiated, massive, indiscriminate lock-downs - have to be held accountable for heating the markets. So, now Powell see his mission in 'a moderation of labor demand growth' and promises more devastations until the inflation retracts back to 2%.