12/18/2020 - Yra Harris: Was Powell’s Press Conference Loaded for Bears?

“Powell went out of his way to note the FED wasn’t worried about TRANSIENT INFLATION in some prices because this is not like the 1970s where a 6% annual increase led to a 6% increase in all prices the following year, promoting a cycle of ever higher prices. What Powell didn’t explain was to WHY. Private sector unions have been decimated by the flow of money around the globe seeking cheap labor, which has DESTROYED private sector negotiating power.
The collapse of the Soviet Union and rise of China freed hundreds of millions of workers to join the world economy and compete for jobs. It seems that the FED is aware that the rise of India will bring even more workers thus giving credence to my view of NEHRU not NAIRU. The FED is bent of lower for longer.
The Fed also released an addendum statement about extending the DOLLAR SWAP LINES to the central banks in need of DOLLARS last March when the U.S. DOLLAR SOARED IN RESPONSE TO FEARS OF A GLOBAL DEPRESSION brought on by COVID. The DOLLAR is currently making multi-year lows so what is the need to extend this special program except to allow the world to know THE WINDOW IS OPEN. That’s truly a statement of LOWER FOR LONGER.
In the 24 hours post-meeting, the markets have responded with an equity market rally, a large appreciation of the precious metals commodity prices — now at the highest level since mid-February — and most importantly, a sizable selloff in the U.S. DOLLAR. Now, if the FED were to actually announce any ostensible YCC look for these outcomes to continue in a major momentum move. LOWER FOR LONGER to combat incipient global deflation doesn’t appear except in the bowels of the FOMC. Do you see what I see?”

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