Federal Reserve Chairman Jerome Powell assured us last spring that inflation was transitory. He was wrong then, and he is wrong now. It is as if Mr. Powell, his fellow Fed governors, and the approximately 400 doctorates who work for the Federal Reserve are all fit with blinders.
You have heard of the madness of crowds… on Tuesday this week, we witnessed the madness of computers. A few years ago, we talked quite a bit about the phenomenon of computer-driven trading. It is still there, and every once in a while, it rears its ugly head.
Fed action isn’t causing the real economy to slow dramatically, as the market fears. Every time we get data confirming this, the market, instead of celebrating good news, fears for even more Fed action, which it believes will cause real harm. At some point, good news has to be accepted as good news.
