Wednesday's Market Minute: Jay Powell's Biggest Moment Yet

Make no mistake, today ushers in an important and mostly new phase for markets. With major market benchmarks flirting with extremes, Jay Powell’s navigation of his biggest moment yet is bound to leave some corner of the market unhappy over the coming months.

Here are a few of the options:

1. Bond bulls that are either in the most extreme version of the global hunt for yield yet, or warning that a recession is imminent without a rate cut.
2. Stock bulls that have been buying up equities in unison with the bond rally – nothing abnormal by this bull market’s standards, but certainly never against the backdrop of recessionary risk as suggested by the inverted yield curve.
3. The Fed and Jay Powell himself, who has said since the beginning he is data-dependent and White House-independent. Any shock cuts would make us question these allegiances.
4. “Everything Bubble” bears. This is the crowd that says monetary policy will drive us to ruin, the dollar will crash, gold will rally, the world will end, etc. They’ve been very wrong so far but if the Fed starts cutting just six months after their hike cycle, get ready for these folks to get loud.
5. Cryptoknights and Bitcoin bulls, who attribute the latest rally to investors eschewing gold for crypto as a way to hedge against irresponsible monetary policy. Seeing how Bitcoin fares amid all this will be hugely important for that crowd.

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