Markets SINK In Reaction to Jay Powell Speech

Chris reacts to Federal Reserve Chair Jay Powell’s Economic Club of Chicago speech, where Powell warned that Trump’s tariffs could spark temporary or persistent inflation and even stagflation, straining the Fed’s dual mandate of price stability and full employment. Markowski critiques the uncertainty around a 90-day tariff pause, questions June rate cut expectations, and highlights the market’s sell-off, slamming Trump’s pressure on the Fed as reckless while noting Powell’s commitment to anchoring long-term inflation expectations. www.watchdogonwallstreet.com

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it will have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
So Jade Powell in the Fed tell Donald Trump to
take a long walk off a short peer. Oh yeah, yeah.
Powell gave a speech to the Economic Club of Chicago yesterday,
and yeah, tariffs are likely to generate at least a

(00:37):
temporary rise in inflation. And again he uncertain, like the
rest of us, are the effects how long it takes
for them to pass fully into prices? Keeping longer term
inflation expectations well anchored? What else did he say? Our

(00:58):
obligation is to keep longer term inflation expectations well anchored
and to make certain that a one time increase in
the price level does not become an ongoing inflation problem.
He also raised the idea that stagflation could be possible.
We may find ourselves in the challenging scenario in which

(01:19):
our dual mandate goals are intention Again, the Fed getting
pulled in both directions. Okay, in regards to inflation and
also in regards to full employment and the economy. He said,
if that were to occur, we would consider how far
the economy is from each goal and the potentially different
time horizons over which those respective gaps would be anticipated

(01:43):
to close. Yeah, he says, we're gonna wait. You know,
Wall Street was thinking, hey, you know, maybe June. Yeah,
you know, June might be the time with the Fed
is going to start lowering rates. How as of right now,

(02:07):
you've got this ninety day pause there on tariffs. Supposedly
we are well, we really don't know, we don't know
really anything. If that's still on, how is he going
to lower rates in June? If he doesn't know what's
going to happen, if that teriff thing is going to
come off in July.

Speaker 3 (02:27):
And the markets didn't like it, No, no, no, they
were not happy at all about this, and we had
a well an exacerbated selloff after he spoke.

Speaker 2 (02:42):
I don't I don't know with Trump is going to
come out with a tweet he did a week or
so ago telling the Fed to stop playing politics and
to lower rates. Fed can lower rates again. The bond
market's going to do what the bond market is going
to do. Just that simple. And I think Jay Powell

(03:05):
knows that Trump, Well, Trump gonna get rid of the Fed. Yeah,
you really want to throw you want to make the
markets even messier, you want you want to screw with
things to an even greater degree. Start pulling that crap
and see how that works out for you. It's like
the Fed has some sort of magic button. Here we

(03:27):
come to save the day, like mighty mouse. Not going
to be able to do it. They've been put in
a precarious position at this point in time quite in
my opinion, like you said, here a completely nonsensical position
thanks to Donald Trump. And that's where we're at. That's

(03:49):
where we're at. And again that's that was That was Wednesday,
my Lord merciful, who knows what in God's creation is
going to happen on Thursday Day? Uh? Yeah, Confucius said,
may you live in interesting times? Uh? I don't think
he was talking about this watch dog on Wall Street

(04:11):
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