Fed Chair and Rise and Fall of Market
I find it interesting that many are comparing this period of selling to 1987. A new Fed Chairman named Alan Greenspan started his new job that faced a market crisis situation. As the man that would go on to be known as the Maestro, Mr. Greespan took swift action; the selloff was short-lived, and the ensuing rebound lasted more than a dozen years.
Greenspan took swift action by lowering rates and calming the fears of Wall Street. Later, he would be blamed for missteps in management - the market bubble on the upside and the downside. Of course, Greenspan is best known for his observation of “Irrational exuberance,” a call on the stock market rally, which proved to be prescient four years later (I am writing this with a slightly tongue-in-cheek approach).
Jay Powell at the Plate
Jay Powell, the new Fed Chairman, started his first day on the job yesterday with the biggest single- session point loss in history. Ironically, his best move may be to telegraph to investors that he won’t be making any moves, or at least fewer moves than the Fed previously signaled. Investors will also want to hear from the White House very soon with soothing words that will direct attention to the underlying economic fundamentals.
We were reminded there isn’t any sector to hide in when these swoons occur - even utilities.
For those unfamiliar with these kinds of market drops, this is gut-wrenching; even for those of us that have been through a few market crashes, it’s not a pleasant ride. While it might sound callous, the fact is this selloff is happening so sharply that it takes us to where we have to be sooner rather than later.
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