Can the stock market finally overcome bad news? Imagine if Fed Chair Jerome Powell pivots further to the hawkish, dark side and says that he cannot guarantee that the Fed’s monetary tightening won’t cause a recession.
At his May 4 press conference following the latest meeting of the FOMC, he reassuringly stated: “I think we have a good chance to have a soft or softish landing....” After the stock market closed on Thursday, May 12, we all learned that Powell pivoted further to the hawkish dark side, yet the stock market didn’t tank Friday morning. It rose smartly, instead. In an interview on Thursday with Marketplace, Powell said the following:
(1) “What we can control is demand, we can’t really affect supply with our policies. And supply is a big part of the story here. But more than that, there are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so. So the question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.”
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