Tweets, Bondies & Junky Monkeys
The stock market rocked today after news that Trump and Xi put the trade war on hold over the weekend at the G20 meeting.
Trump tweeted, “China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.”
However, Joshua Green tweeted, “Larry Kudlow admitted on press call just now, ‘We don't yet have a specific agreement on that’ -- never take a Trump tweet at face value”
Also, the market believed Jerome Powell sounded all lovey dovey with his comments after last week’s Fed pow wow.
But, Business Insider says the “junky monkeys” didn’t hear Powell right. BI says the “bondies” are the real Powell whisperers.
He didn't say the Fed is close to neutral. He was more specific — he actually said, for the record, that "interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy — that is, neither speeding up nor slowing down growth."
What this means rate-wise is,
he said rates were slightly below the low end of the range of estimates. That range is estimated to be between 2.5% and 3.5% — so at a 2% to 2.25% band right now, rates are between 25 and 50 basis points below that low end. And rates are still about 75 or 100 basis points shy of the midpoint, which is what Powell was referring to back on October 3.
So, three or four more bumps. As for the trade war, who knows? Meanwhile,