Fed Chair Kevin Warsh Will Tackle Inflation
The Federal Reserve chair seems to understand an obvious truth about the economy.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
The Institute for Supply Management will release the Chicago PMI on Friday morning. Nobody cares, except for maybe a few folks running businesses in and around Chicago. The University of Michigan will revise its August surveys for consumer sentiment and inflation expectations at 10 a.m. ET. Most folks bearing an IQ higher than their body temperature will have their attention focused elsewhere, though.
That probably does include, though it may not be readily apparent, a majority of traders, investors, economists, central bankers, former central bankers, financial journalists and just about anyone with a stake in U.S. economic performance. All eyes and especially all ears (mine don’t work anymore, went mostly deaf years ago in the service of my country — if you’ve seen me on TV, you may have noticed that I struggle if I cannot see the lips of my interviewers) will be trained upon Jackson Hole, Wyoming.
Will new Fed Chair Kevin Warsh use this opportunity to send a message to markets? That’s been done from the Kansas City Fed’s annual economic symposium before by far less capable federal reserve chairs (yes, that’s an opinion). The truth is that I don’t think there has been a truly great Fed chair since Paul Volcker (another opinion). That man gave me goosebumps. To have been a fly on the wall (which I have had the pleasure of being) when that man addressed a room. Just wow.
Since those times, we have had a series of overeducated, undisciplined economists that simply relied upon the perversion of free market price discovery and the expansion of money supply to achieve, or should I say “delay,” the eventual expiration of the debt super cycle. I think Warsh is closer to being a Volcker than he is to being one of those characters who were really nothing more than bureaucrats.
That scares me a little. Why? I don’t think the Fed should increase short-term rates right now or anytime soon. Warsh, who is legit, is a hawk at heart. He will tackle inflation. He speaks at 10 a.m. ET. Even if he really wants to remain as vague as he has been concerning the trajectory for U.S. monetary policy, he’ll likely have to say something meaningful now that the Treasury Department has increased its participation in secondary markets.
I can appreciate the way he thinks. I, as I have written, even as recently as Friday morning, do not think that the time is right for a short-term interest rate hike. My argument is and has been that making policy adjustments to slow rising prices does nothing to slow inflation when inflation is caused by a shock to supply. Many of Warsh’s colleagues, despite their gaudy educational backgrounds, do not understand the simplicity of this obvious truth.
See you after 10 a.m., kids…
The Portfolio
We’re not doing much ahead of Warsh or going into the weekend. That said, the portfolio is going to add 5 shares of (EVLV) just to make a round lot.
Thursday’s Intentions vs Actual Trades
Intention: Sell 25 shares of ALTO at or close to the last sale of $4.00
Actual trade: Sold 25 of ALTO at $3.97
Intention: Sell (write) one (SOFI) November 19 $22 call for about $1.05
Actual trade: Sold one SOFI November 19 $22 call for $1.20
Friday’s Intention
Purchase 5 shares of EVLV at or close to the last sale of $5.36
Current Positions
Long 200 shares of ALTO at $4.7224. Target price: $8. Last sale: $4.12.
Long 40 shares of (ASPN) at $5.23. Target price: $10. Last sale: $5.23.
Long 95 shares of (EVLV) at $5.8183. Target price: $8.50. Last sale: $5.36.
Long 100 shares of (OCUL) at $8.3545. Target price: $11. Last sale: $10.61.
Short one OCUL $11 September 18 call at $1.65, Last sale: $0.65.
Long 250 shares of (ONDS) at $8.3642. Target price: $14. Last sale: $8.67.
Long 55 shares of (PL) at $24.1931. Target price: $46. Last sale: $21.12.
Long 10 shares of (RKLB) at $73.041. Target price: $101. Last sale: $66.94.
Long 100 shares of (SOFI) at $15.8511. Target price: $24. Last sale: $19.28.
Short one SOFI $22 November 19 call at $1.20. Last sale: $1.17.
Long 60 shares of (SWBI) at $14.9645. Target price: $19. Last sale: $13.06.
Long 100 shares of (VELO) at $12.2986. Target price: $21. Last sale: $12.76.
Cash: $259.06.
Portfolio value: $10,671.31, +6.7% from inception on March 24.
At the time of publication, Guilfoyle was long ALTO, ASPN, EVLV, OCUL, ONDS, PL, RKLB, SOFI, SWBI and VELO.
