Jerome Powell

• Unlike his recent predecessors had primarily private sector experience (vs academic)

Federal Reserve Under Jerome Powell

• Overall his Fed was much different than under past chairman
• For most of 2018 focused on the real economy - not stock market performance
• Fed Officials rarely issue public comments outside of official Fed events ( far more public statements under Yellen & Bernanke)
• Directed the FED to look for new methods to measure REAL economic levels (past measurements have been manipulated)
• Adopted a policy that fed focus was on reaching  a "neutral interest rate" without concern of stock market valuations
• Oversaw a Hawkish Fed policy 2018:  multiple rate hikes and QE on Autopilot
• Didn't waiver in 2018 as Emerging Markets crashed (some think because of Fed Policy Tightening)
• Claims that the Fed is Data Dependent (not driven by market performance)
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Jan 2018 - Dec 2018 Policy

• Fed policy was set on 3-4 rate hikes/year
• Page of QT would reach $50B/month and stay there
• Not concerned about EM problems caused by this
• Only a major crisis would change this

Jan 2019 Policy Shift

• Said that he'd consider changing balanced sheet policy if needed (1/4/19)
• Said that he might end QT earlier than expected (1/25/19)
• Suggested that there may be no more rate hikes in 2019 (even with historically low unemployment)
• Criticism that Powell shifted to supporting the markets vs. normalizing policy (Powell Put) after market declines in Dec 2018
• One of the biggest Fed reversals / policy shifts in history
• Potential Reasons for Policy Shift
• Credit Market Break Down:
• High Yield Bonds dropped nearly 7%.
• No High Yield issuance in 12/18 (40 days) - first month since 2008 Lehman collapse
• Jan 30, 2019 is the day he publicly became concerned about stock markets (like Bernanke and Yellen before him)

Notable Actions / Speeches

• Indicated that the Fed would raise rates above the neutral rate and that we weren't at the neutral rate yet  (October 2018)
• Sent interest rates higher (10 year treasury highest since 2011)