Welcome to the Job, Jay

This week makes interesting on-the-job training for Federal Reserve Chair Jay Powell. On cracking open the crisis-management handbook, he will read that the first rule is that a significant asset price move reveals something about someone’s balance sheet. Unfortunately, what that is and whose balance sheet is unknown before the event. The second rule is to fade the initial impulse to react because financial markets can be volatile and mostly self-correcting. As a result, Fed rhetoric typically moves much more slowly than markets. The third rule is that a policy decision reveals an official opinion about the underlying economy. The same Fed enjoying good press last year that its hikes showed confidence in underling economic strength most likely now frets failing to deliver what had long been expected will be read as doubting the viability of the expansion.