Fed Chair

The market has been waiting for Trump's Fed chairman nomination and the suspense was building up until Friday, when a trial balloon seems to have made it almost a lock that Jerome Powell becomes the next Fed chair.  Trump got what he wanted with the Powell trial balloon.  The stock market rallied strongly as did the bond market.  I am sure Mnuchin will be in Trump's ear telling him Taylor as Fed chairman will tank the stock market. 

Powell is a low interest rate guy, someone who follows orders, and I am sure Trump has asked him for a pledge to keep interest rates low if he were to be Fed chairman.  Unlike Taylor, Powell seems more interested than Taylor in playing politics and strategically being dovish to increase his chances of getting future government and corporate gigs.  That's why he was basically a yes man to Bernanke and Yellen.  That is why Neel Kashkari has taken the strategy of being the dovish outlier, the crazy dove who thinks rates should be lower in the face of near consensus rate hikes, complaining about the lack of inflation.  That is how he is able to get himself into the conversation for Fed chair nominee even though he's only joined the Fed board recently. 

By the way, on inflation, and the Fed still looking for that 2% inflation rate.  Well, good luck with that, because it is clear as day that the CPI and PCE inflation numbers have been so manipulated to the point that it can really only spit out low inflation readings unless there is hyperinflation.  Hedonic pricing, substitution, and "new" valued added features compensating for higher prices of goods, etc.  It was comical in the middle of  2008 to see the government pump out low single digit % CPI numbers as the dollar weakened against everything, corn went from $3.50 to $7.50/bushel, and oil went from $50/barrel to $147/barrel from 2007 to mid 2008. 

Anyway, the Fed chairman job, if Trump is looking for someone who will obey his commands and keep interest rates low, Powell is his guy. 

On Friday, we took a page out of 1999 and got a huge surge in the high flying big cap Nasdaq names, while the rest of the market was doing nothing.  It is a bubble, but there are so few of those high growth stocks remaining in this market that the supply just can't meet the demand unless prices go higher.  Even at these levels. 

Hoping (however, not expecting it) we could maybe get a sustained VIX rise for once, but it petered out again after the Powell rumors and Nasdaq surge on Friday.  Back to the same old low VIX grind. Again.