Mike O’Rourke: “The Market is More Broken Today Than it Was on March 23rd, and It’s Entirely Due to the Fed”

from Zero Hedge

Authored by Mike O’Rourke, Chief Market Strategist at JonesTrading

Ignorance is Bliss

The investment community witnessed financial history on Wednesday. For fifty minutes, Federal Reserve Chairman Jay Powell highlighted the risks to the economy. Specifically, he indicated that there is so much uncertainty to the economic outlook that the Fed’s forecasts in the Summary of Economic Projections are essentially useless. He warned that there are 22-24 million people out of work, and that millions will remain out of work when the economy recovers. He skillfully dodged a couple of questions about asset prices. Finally, with the last question of the day, Bloomberg’s Mike McKee nailed it when he asked the questions on all investors’ minds. Essentially, he queried whether the Fed’s response has created a bubble and financial stability risk, and second, whether the Fed has played a role in driving wealth disparity in this country, and last, whether there is a policy tweak that could adjust that trend? The Chairman did not specifically address the second question, but throughout the press conference and his recent speaking engagements, he has stressed that the Fed’s interventions are intended to help the most vulnerable of society. At this point, we are all well aware (and history has proven) that the Fed’s policies to help the vulnerable help the wealthy far more and continue to fuel wealth disparity.

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