Market Observations

Powell the Padawan

Market Observations White Paper
May 2019

Authors & Contributors

One wonders if Jerome Powell had a premonition of a bad feeling when he was offered the job as Chair of the Federal Reserve. His first year involved a lot of on-the-job training, including an equity market correction, outbursts of presidential wrath and, of late, a global growth scare. Over 2018, economic data releases in the US ran south of expectations and the spending intentions of purchasing managers sagged. Outcomes abroad, especially in Europe, looked ominous, with Italy technically in recession and Germany barely squeaking by one. At the start of 2019, good news out of China was few and far between.

In retrospect, the world learned the consequences of global trade coming to a grinding halt. Trade volumes in December were below that of twelve months earlier, a sudden stop if ever there was one. During this fraught window, one government, the US, shut down partially and temporarily, while another, the UK, hyperactively polled itself about withdrawal from the European Union only to find disagreement and distraction. Meanwhile, Germany struggled with the uncertain transition of its auto industry (which accounts for more than 7 percent of national output) in the face of an electric future.