It’s Not “Quantitative Tightening” – It’s Powell

After yesterday’s FOMC a narrative has developed that markets were reacting to Powell’s failure to talk about scaling back so-called “quantitative tightening.” The doesn’t square with the timing of the stock market’s fall after the statement was released and during the press conference. The problem is that Powell mismanaged expectations for forward guidance, knowingly disappointed those expectations, and showed a careless and superficial demeanor. Having been appointed as a non-independent Fed chair, he seems to have gone rogue, just as Sessions did in analogous circumstances. Otherwise Trump wouldn’t have to try so hard to rein Powell in. Like Carter had to get rid of Miller, Trump now must find a finesse to get rid of Powell.