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A Powell stumble tomorrow and it’s the curtains for this deal

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A Powell stumble tomorrow and it’s the curtains for this deal

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At first glance, Wednesday’s FOMC meeting is a non-event.

The consensus is that tapering will continue as planned, ending in March. The Fed will also propose a rate hike for the March meeting. We’ll have the usual talk of inflation risks, but with caveats that it should diminish later in the year.

Yet when you study the scene in the markets, it’s clear there’s a lot more going on. The volatility of the S&P 500 is jaw-dropping, with the S&P 500 dropping 50 points in the past few minutes after recovering from a 126-point deficit.

This backdrop has markets on edge and that’s what will make Wednesday so difficult for Powell. A wrong turn of the tongue and that’s the curtain for this market. The slightest hint of a cavalier attitude towards hiking will cut the market’s legs off. Even a misinterpreted line could do it.

We have seen this happen many times before with many Fed Chairs, including Powell. I bet he wishes he could cancel the press conference.

More than ever, tomorrow’s livestream will be valuable and we will be there to analyze in real time.

A Powell stumble tomorrow and it’s the curtains for this deal

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