It's well documented that Jerome ‘Jay’ Powell’s favorite economist and economic hero is Paul Volcker, but Wall Street saw him more like Alan Greenspan yesterday.

He came out yesterday, swatting away all the tariff and inflation hysteria and reminding everyone that the administration has an agenda focused on four areas and began with trade first.

The media lost its collective mind and began peppering Powell with nonstop questions about tariffs. One dig stood out after Powell resurrected the word “transitory” to describe higher prices that resulted from tariffs. 

The Bloomberg report went for the kill, bringing up how wrong the Fed was about inflation being “transitory” before finally relenting and implementing a string of monster rate hikes.

Powell also repeatedly pointed out the difference between good “hard” data and “soft” data, reflected in the media’s terrific horror campaign.

FOMC Decision

Some observers say the Fed is calling for stagflation (lower Gross Domestic Product (GDP) and higher inflation), but this just accounts for a potential one-time bump in prices as inflation slips back to the December projections.

The final assessment is that Powell sent a signal of accommodation, dramatically lowering quantitative tightening (QT) and dismissing economic calamity from tariffs.

The market liked what it heard.

Market Now Looks for Tech to Lead

If this market can gain traction, it will be led by Communication Services (XLC) and Technology (XLK) and aided by a powerful short squeeze, which was brewing on Monday.

Today’s Session

It's not unusual to see the market move in the opposite direction after the post-FOMC portion of the prior session. However, once again, this is more about the financial media's negative coverage. Now Powell is in the bullseye of this coverage for being too dovish.

Meanwhile, the Philly Fed Manufacturing Survey came in stronger-than-expected. The good news was better employment components.

Prices paid surged, but prices received moved lower – the notion of passing the cost on to consumers isn’t true for most industries.  

I'm not thrilled to see the market open lower, but this is a great chance to see if the buy-on-dips crowd makes a move.

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