Powell’s testimony is very important in interpreting how the 🇺🇸 market will be in the next 1-2 weeks, so 🐯🐯🐯 let’s do a detailed analysis together by going through the important parts of his testimony in detail🕵🏻♀️🕵🏻♂️ Instead of me just telling you my Point-Of-View (POV) which may not be accurate, I have extracted parts of Powell’s testimony word-for-word so that you can form your POV & compare it with mine😉
How Did Powell Start❓
“My colleagues and I are acutely aware that high inflation is causing significant hardship, and we are strongly committed to returning inflation to our 2 percent goal. Over the past year, we have taken forceful actions to tighten the stance of monetary policy. We have covered a lot of ground, and the full effects of our tightening so far are yet to be felt. Even so, we have more work to do. Our policy actions are guided by our dual mandate to promote maximum employment and stable prices. Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of labor market conditions that benefit all.”
🧐My Interpretation ➡️ Very Hawkish🦅 Unfortunately, Powell & his team don’t care that people are going through hardship (even though he’s aware) & are strongly committed to the 2% inflation🎯 at all costs❗️
How Does The Fed View The Current Economic Situation & Outlook❓ “The data from January on employment, consumer spending, manufacturing production, and inflation have partly reversed the softening trends that we had seen in the data just a month ago. Some of this reversal likely reflects the unseasonably warm weather in January in much of the country. Still, the breadth of the reversal along with revisions to the previous quarter suggests that inflationary pressures are running higher than expected at the time of our previous Federal Open Market Committee (FOMC) meeting.”
🧐My Interpretation ➡️ There has been progress but there are still concerns about the higher-than-expected inflation❗️
How Does The Fed View Monetary Policy❓ “With inflation well above our longer-run goal of 2 percent and with the labor market remaining extremely tight, the FOMC has continued to tighten the stance of monetary policy, raising interest rates by 4-1/2 percentage points over the past year. We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In addition, we are continuing the process of significantly reducing the size of our balance sheet.”
🧐My Interpretation ➡️ Rate hikes at least for March & May & I don’t see a pause in sight❗️
“We will continue to make our decisions meeting by meeting, taking into account the totality of incoming data and their implications for the outlook for economic activity and inflation”
🧐My Interpretation ➡️ 🇺🇸 markets will be volatile ahead as investors continue to react to every positive & negative economic data & speech🎤 for Fed officials❗️
“Although inflation has been moderating in recent months, the process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy. As I mentioned, the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
🧐My Interpretation ➡️ 50bps is definitely as consideration & possibility🥵🥵🥵
How Did Powell End❓
“The historical record cautions strongly against prematurely loosening policy. We will stay the course until the job is done…To conclude, we understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission. We at the Federal Reserve will do everything we can to achieve our maximum-employment and price-stability goals.”
🧐My Interpretation ➡️ Very Hawkish🦅 There will NOT BE RATE CUTS✂️ in 2023, 2%🎯 is non-negotiable & people will have to suffer. It is how is it is…We will still try for soft-landing but no guarantees🫠🫠🫠
$Amazon.com(AMZN)$ Bearish$Pinduoduo Inc.(PDD)$ Bearish$Alibaba(BABA)$ Bearish$SPDR S&P 500 ETF Trust(SPY)$ Bearish$Netflix(NFLX)$ Bearish$S&P 500(.SPX)$ Bearish$DJIA(.DJI)$ Bearish
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