FED Chairman Powell Completely Disbanded

In my opinion, June 12 was the day of shame for the American Central Bank. I have never seen a day where he was so unprepared, lacking in analysis, and Powell didn't know what he was doing on stage. However, we actually didn't start the day very well. Amazing inflation data came from America. There were super breaking news headlines like inflation being 0%. However, the lazy managers of the FED did not look at this data published 5.5 hours before announcing their own interest rate decisions, or even if they looked at that data, they did not take it into consideration. This was said by US Central Chairman Powell himself, and as a result, Powell had a presentation that was demolished by the members of the press, in which none of the super hawkish, nonsensical, inconsistent numbers fell into place, based on the relatively high inflation figures of the previous month and even the first quarter. It was really bad. Well, I will explain how the markets will behave from now on in the face of this disgrace of the FED despite the amazing inflation data.

Let's look at inflation data first. Core inflation is 0.2 month-on-month. Actually, this is not 0.2, by the way, it is 0.16, the expectation was 0.3. The previous period was 0.3, there is an improvement. Year-on-year core inflation expectation was 3.5, actual 3.4. Headline inflation was 0.1 expected month on month. The previous month was 0.3, this month's number is 0.0. 0, meaning there is no inflation in America, headline inflation decreased from 3.4 to 3.3 when we look at it year by year. Why did it go down less? Because we were in a month where there was not much base effect. I did not believe that better inflation data could be obtained. These are beyond my expectations, especially if we look at some details, you will understand even more clearly how magnificent they are. According to the data announced by the American Statistical Institute, inflation in America, where we excluded food from yesterday's inflation, is zero. But more importantly, when you subtract the rent, inflation in America is - 0.2. As of May - 0.2, no decrease in rent again. Because there is always a problem with rents when calculating inflation. If the European Central banks used the American Central Bank to calculate housing inflation, I think non-food inflation would have been around -0.5 on June 12.

But despite this, non-food inflation is 0, non-housing inflation is 0.2. When we subtract food and shelter from all inflation items - 0.3. When we subtract food, housing and energy from all inflation items, inflation is zero. Inflation is out of whack in America by a lot of different criteria. For example, it was said that services inflation stuck like glue. However, when we look at the data on June 12, when we subtract rent from all services, inflation is 0. When we subtract medical services from all services, inflation is 0.2. 0.2 annualized to 2.4. 0 annualized is 0. Those are scary good numbers. But members of the FED made statements as if these numbers did not exist. It turns out that these numbers didn't exist for them anyway. Now what was it about the Fed's statements and projections and Powell's statements that made me super angry and where they were completely inconsistent. How the press blasted Powell with a few questions. Let's take a look at it.

First of all, summary of economic projections, that is, the future outlook of FED members, what they expect in the economy. They say that we expect PCE inflation to be 2.8% at the end of the year. If you look, pce inflation is already 2.8% and we have not yet seen the effect of the low inflation on June 12 on pce. This is because it is calculated after 15 days. So, do we think that inflation will never decrease between now and the end of the year, especially considering this latest low inflation data? Why set a target that has already been achieved at the end of the year? A press member asked the FED about this. He said that in March, you were projecting year-end inflation as 2.6%. "Now you say 2.8, but we are already there," he said. Last year, inflation had gone very low in the second half of the year, Powell said, due to base effects etc. We thought maybe it would rise. So this is just a rough guess. We're not so sure. Of course, we were a little conservative. When he acted conservatively, such a calculation was made. He did not take into account the fresh inflation data that came on June 12th. In this context, a second question came up. They told Powell that inflation data was announced while you were at the meeting. They asked: "Have you taken these into account?"

Powell said that we distributed the incoming data to the members. They examined this, but I don't know if they took it into account. Because remember, the data here is created by the independent decision of each FIMC member. I guess most of them didn't take it into account. What he didn't take into account is that the interest rate decisions taken by the FED now have a huge impact on the American economy and therefore on all world economies. Another interesting data comes from here. Four of the FED members do not see an interest rate cut until the end of this year. 7 of them we see an interest rate cut by the end of the year. We see 2 interest rate cuts in 8 members by the end of the year. When we look at March, only 2 members predicted no interest rate reduction, while by the end of the year, 2 members predicted 1 discount, 5 members predicted 2 discounts, 8 members predicted 3 discounts, and even one member predicted 4 interest rate cuts. Great inflation data came on June 12. These predictions have been carried upward. They foresee almost no interest rate cuts. There are even some hard-headed people who say we should not lower interest rates at all. Now, based on this, they asked two more questions. They said to Powell, first of all, where do you see inflationary pressures? He said that we see it in non-rental services. As I just mentioned, inflation in non-rental services is 0. There is no such inflation.

They asked another question. Well, they said, you were saying that if there was a deterioration in employment, you would reduce the interest rate, unemployment reached 4%. He said that we do not see a deterioration in employment. In the latest data, there is actually an increase in new positions. A smart-minded journalist mentioned a problem before. But different employment data gives very different results. So when companies are asked, they say that employment has increased. But when individuals are asked, there is a serious employment collapse - about 400,000. According to a payroll-based research conducted by a large institution, there is a serious decrease in employment. He said, "What do you say about the contradiction between these?" Do you know what the President of the Central Bank of the United States of America said? Companies such as Google, Meta, Apple and Tesla emerged from this country. This country is still one of the centers of science. Do you know what he said? "We are having a hard time establishing a connection between those employment data, and they look a little different to us," he said. I think they are a bit overstated, so they seem really high. But the general impression we get is that employment is strong. There are people who can do this calculation better than Powell. Isn't there someone among the 300 Central Bank members with a doctorate who can sit down, analyze these differences and reveal the real employment situation? Powell said our general impression is that employment is not too bad.

Then they asked new questions. The journalists on June 12 were also patched, one of them said at that time, 2.8% PCE inflation is already there, that means you think you will not get any results from the inflation fight until the end of the year, it will remain at 2.8. Then why are you making even one interest rate cut? He said, "If you see that the interest rates are sufficient, remember that they are not increasing them at the moment, then how come there is no contraction in the economy?" They saw year-end American economic growth as 2.1% in March, but they still see it that way. They saw unemployment as 4% and they still see it that way. I don't know how they can see it that way, by the way. Currently, unemployment in America is already 4%. If economic decisions continue, there is no possibility of it being 4% at the end of the year, mathematics makes this impossible. But how does this happen, he said. "So what are you doing?" he said. He said nothing in response.

The stock market had risen tremendously, with the inflation data, the rise in Nasdaq had reached up to 2% at one point. Then it dropped a little from there, but honestly it didn't drop as much as I expected. Nasdaq closed the day around 1.5% higher. My comment is that the market did not take these guys seriously. Because we know that the pce in May will be very low. They show 2.8 at the end of the year, but it will be around 2.4 by the end of May. We still have inflation data for June before the FED's July meeting. That's why the market didn't take them seriously. The important thing is that inflation is improving. Despite the FED's nonsense, the economy is still not collapsing, he said, "What's up?" and the market said let's do our job. It closed this week with an increase. Frankly, I did not want to believe that the FED was such a poor quality organization. Yes, the FED has made many mistakes in the past, but I still thought that we were faced with common-sense, smart-minded people.

On June 12, I saw that, let alone being common sense and smart-minded, they were lazy to update the incoming data every 5-6 hours. They are super cowards, what they are most afraid of is what will happen if we cut the interest rate now and inflation comes back. As far as I understand, they are trying to manage the situation until the election. I think the risk of recession in the American economy has now increased. Because as FED members delay, the damage becomes permanent. For example, the economy is not strong in America, he says, but the man says consumption continues. When we look at the details and numbers, consumption continues, but it continues with borrowing and credit cards. It does not continue because the citizens have money and payment problems have started with credit cards. What he said had nothing to do with real data. I can say that I now look with more concern at the American economy, which is managed by such a Central Bank president and his super lazy indecisive nonsense bureaucrats. In this context, I am not currently making position changes. But between the end of June and July I look at it completely differently.

I was thinking like this before: June will be a good month. June has been very good so far. I thought July would go well, now I'm worried. Because somewhere there may be news that America has already entered a recession, or FED members may suddenly hold an emergency meeting and announce interest rate cuts. The market doesn't like this. Because a sudden interest rate cut may mean that there is a problem in the market. Don't get me wrong, my positions are still long. I want to believe that the FED can still figure this out. But my faith is getting weaker and I may not want to deal with that much risk in the hot months of summer.

The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.

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