The Fed does not rush to save the markets this time

The idea that the Federal Reserve will rush to save investors in a crisis has been comforting investors for decades. But in the large slowdown in the market induced by President Trump’s prices, no rescue of the Fed is in sight.

Jerome H. Powell, the president of the Federal Reserve, clearly said it on Friday. The prices are much more “larger than expected,” he said, and their immense scale makes it particularly important for the Central Bank to understand their economic effects before taking measures.

“It is too early to say what the appropriate path will be for monetary policy,” he said at a conference in Virginia.

In fact, I would say that the probability of additional market drops is much greater than the possibility that the Fed transforms markets in the immediate future.

What investors in American equities have known so far is what we know about Wall Street as a correction – a decrease of 10% or more compared to a peak in the market. The correction does not end, with this common definition, until the markets turned over and this peak was exceeded. For days, however, the momentum of the market was almost entirely downward. Thus, another dubious distinction is in sight: a lower market, which represents a drop of at least 20% compared to a top of the market. Friday, for the S&P 500, which ended at 5,074.08, against its peak of 6,144.15 on February 19, a lower market is already at a cry distance, at 2.6 percentage points.

It would be pleasant to be able to say that the bottom of the stock market is close, or that it has already been reached, said Edward Yardeni, an observer of the veteran market, in a conversation on Friday.