Federal Reserve Is Using Strong Rhetoric To Sound Tough

(RoyalPatriot.com )- JPMorgan Asset Management Chief Global Strategist David Kelly David was asked on a Fox broadcast what he thought of the stock market tanking in 10 minutes and what investors think of the fed’s more hawkish stance.

Kelly said that Jerome Powel’s speech was pretty much what we expected it to be. He wanted to sound very, very tough and say he “really, really, really, really means he’s going to bring inflation down. Kelly said that’s all that speech was about.

Broadly speaking, they’re saying they want to fight inflation, and that’s what the market reaction was all about.

Kelly says we might get a 75 basis points rate hike, but J. Powell says that is about it. He thinks we may end up with 25 basis points more than we would have otherwise. They want to sound tough, so saying 75 basis points certainly sounds tough.

The Fox host asked Kelly if there was any evidence of inflation being lowered.

Kelly said, “yes.”

We’re seeing gasoline prices fall every day since the middle of June, and airline fares lower. We’ve seen used car prices fall. He said there are bottlenecks in the global economy clearing. People complaining about deliveries are seeing new stuff that has been stuck on ships.

All of this suggests that inflation is coming down now.

The host then said that in terms of inflation, it tends to deal in the aggregate, and when did he think households would actually be seeing the impact of lower inflation.

Kelly said it depends on what people focus on. Most concentrate on gasoline prices because you can’t drive two city blocks in America without figuring out what a gallon of gas costs. Seeing that come down has helped consumer confidence.

But he feels people will be upset by higher electricity and natural gas prices as we go into the winter. So that is still going to be there.

But overall, things that were going up a lot will be going up less.

Seeing more availability of goods will make people feel a little bit better.

Kelly seems overly optimistic. Many items on store shelves do little if the prices are too high and no one has any money to buy them.

See the interview HERE.