Powell will stay there, Markets in sharp movements!

Powell will stay there, Markets in sharp movements!
Analysis
Ahura Chalki
Author:
Ahura Chalki
Published on: 22.11.2021 22:36 (UTC)
Post reading time: 1.96 min
129

President Joe Biden renominates J. Powell as FED Chair, for a second term 


Earlier today White House announced that Mr. Biden planning to renominate Mr. Jerome Powell for a second term at the helm of the U.S. central bank.


While some Democratic senators, like Sherrod Brown and Senator Elizabeth Warren of Massachusetts, were against this appointment, however, this announcement means that overall economic policymakers endorsed his management over the economic movements, especially after the Covid crises and pandemic recession. However, Mr. Biden will nominate Mr. Lael Brainard as a vice-chair instead of Richard Clarida. This is kind of going in the middle between two parties, and supporting those democratic senates that wanted to replace Powell with Brainard, so now Mr. Biden can help the FED to have its stability in its process, and respect the critics' opinions. 


While Powell's current term ends on February 5, 2022, and it is expected that his nomination also will be welcomed in both Senate Banking Committee and the wider chamber, which must hold a vote, his first term was not out of challenging periods. Last year, reports about central bank officials' stocks trading in early 2020 before announcing the Fed's dovish policy was one of those challenging times for Mr. Powell, eventually has led to the departure of Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren. 


As a reaction, right after the announcement markets had a positive reaction to raise and print new records high in both NASDAQ and SP500, however, it was just an emotional reaction. With this announcement and nominates, have nothing specifically changes and FED will stay at its current trends and policies, therefore the only positive side of news is the stability. Since we already know nominates policies, with no change in the FED chair, market participants and investors can do their planning with more confidence, and it is the most positive side of the announcement. SP500 technically moves in a clear uptrend, however as I mentioned earlier, lack of liquidity with holidays ahead, can increase the market risk. 

Earlier today, we also had the Existing Home Sales increase by 0.8% and 6.34M units, which was much better than market expectations. This data also in the short term can support the bulls, however since it will increase the Hawkish policy expectation, can limit the bull's movements. 


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