{"id":43847,"date":"2019-02-15T19:41:29","date_gmt":"2019-02-16T00:41:29","guid":{"rendered":"https:\/\/olduvai.ca\/?p=43847"},"modified":"2019-02-15T19:41:31","modified_gmt":"2019-02-16T00:41:31","slug":"get-used-to-the-powell-put","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=43847","title":{"rendered":"Get Used to the \u201cPowell Put\u201d"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/dailyreckoning.com\/get-used-to-the-powell-put\/\">Get Used to the \u201cPowell Put\u201d<\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">In the land of the Federal Reserve and its market-manipulating mechanisms, there\u2019s now an unofficial market term called the \u201cPowell Put\u201d or the \u201cPowell Pivot.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is in direct reference to Fed chairman Jerome Powell. Before he became chairman, Wall Street referred to prior heads\u2019 policies with terms like the \u201cGreenspan Put\u201d the \u201cBernanke Put\u201d and the \u201cYellen Put.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In layman\u2019s terms, what the term means is that if the markets fall by too much, the Fed will swoop in and try to save the day, the month, or the year. A \u201cput\u201d in options terminology is insurance against a drop in prices. Nowadays, the \u201cPowell Put\u201d is the market\u2019s insurance that the Fed will act to stimulate the markets if necessary.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Markets had been waiting for it to materialize. But Powell had previously talked about the need to raise rates to give the Fed \u201cenough ammunition to fight the next crisis.\u201d The size of the Fed\u2019s balance sheet would also have to be reduced enough to provide it enough room to grow if needed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Markets began to worry the Powell Put might never materialize when he raised interest rates in December, when the market was in the middle of a severe correction (that nearly culminated in a bear market). He also said the balance sheet reductions, or quantitative tightening, would run on \u201cautopilot.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Markets tanked on his comments. But then on Jan. 4, after stocks fell nearly 20%, the \u201cPowell Put\u201d finally materialized.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In comments addressing the American Economic Association, Powell said he was \u201cprepared to adjust policy quickly and flexibly.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And about the balance sheet reduction policy that was on autopilot in November, he said<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Get Used to the \u201cPowell Put\u201d In the land of the Federal Reserve and its market-manipulating mechanisms, there\u2019s now an unofficial market term called the \u201cPowell Put\u201d or the \u201cPowell Pivot.\u201d It is in direct reference to Fed chairman Jerome Powell. Before he became chairman, Wall Street referred to prior heads\u2019 policies with terms like [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[11023,303,16888,575],"class_list":["post-43847","post","type-post","status-publish","format-standard","hentry","category-economics","tag-daily-reckoning","tag-fed","tag-jerome-powell","tag-nomi-prins"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/43847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=43847"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/43847\/revisions"}],"predecessor-version":[{"id":43848,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/43847\/revisions\/43848"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=43847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=43847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=43847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}