Jerome Powell Finally Believes He Might Actually Get His Soft Landing

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 3 February 2023

⏱️ 15 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode, NLW breaks down the Federal Open Markets Committee rate hike decision, as well as Fed Chairman Jerome Powell’s comments on inflation, the labor force, the debt ceiling and loosening financial conditions. While many commentators have argued that Powell failed to be as hawkish as he wanted, NLW argues that Powell’s ultimate objective may have actually changed over the last few months. Enjoying this content? SUBSCRIBE to the Podcast Apple: https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M= Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW - Join the most important conversation in crypto and Web3 at Consensus 2023, happening April 26-28 in Austin, Texas. Come and immerse yourself in all that Web3, crypto, blockchain and the metaverse have to offer. Use code BREAKDOWN to get 15% off your pass. Visit consensus.coindesk.com. - “The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell and research by Scott Hill. Jared Schwartz is our executive producer and our theme music is “Countdown” by Neon Beach. Music behind our sponsor today is “Foothill Blvd” by Sam Barsh. Image credit: Kevin Dietsch/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8.

Transcript

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0:00.0	I don't know, man, Powell at this point has a pretty good beat on what it takes to send a message
0:04.8	to investors. This is a guy who scrapped his entire plan Jackson Hole speech and hit him hard
0:10.0	with an eight-minute speech that turned markets off a rally back last summer. If Powell had wanted
0:15.1	to tamp down on markets and really fight the narrative around these loosening financial conditions,
0:21.5	I think he would have done so, or at least I think it's a mistake to assume that that was his goal
0:25.8	and he somehow missed it. So what could possibly be the explanation then?
0:32.1	Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts
0:40.4	remaking our world. The breakdown is produced and distributed by CoinDesk. What's going on, guys?
0:48.7	It is Thursday, February 2nd, and today we are talking about the first FOMC rate decision of the year, and whether
0:56.3	Chairman Jerome Powell is finally, truly convinced that he has a chance at a soft landing.
1:02.6	Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it,
1:06.7	give it a rating, give it a review, or if you want to dive deeper into the conversation,
1:10.3	come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash
1:14.7	breakdown pod. Welcome back, everyone. I mentioned earlier in the week that this week would be
1:20.5	the first really consequential macro week of the year. The reason, of course, is that the Fed's first
1:25.8	FOMC meeting was slated for Tuesday and Wednesday.
1:29.7	Now, heading into this meeting, the markets were highly convinced that the Federal Reserve was
1:34.8	going to continue to decrease its pace of rate hikes by increasing the federal fund's target rate
1:39.8	by 25 basis points. While this would mean that interest rates were still climbing, by and large,
1:45.4	the market was more interested in the trend lined than in the specifics. In fact, coming into
1:50.8	this meeting, the really big question wasn't so much how much rates would be raised, although
1:55.7	of course the Fed could have surprised with a larger than expected hike. Instead, it was about
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