Powell Remarks (10 a.m. Korean time)

12/02 Powell Remarks (10 a.m. Korean time)

Currently, the Fed is not making any remarks on monetary policy ahead of the blackout, or FOMC. Despite this, Fed Chairman Powell will attend a lecture commemorating George P. Schultz at the Hoover Institute at 10 a.m. today in Korea, drawing attention as he will give a panel answer on Schultz’s economic policies.

For reference, George Schultz served as U.S. Secretary of the Treasury and Secretary of State and served in the Eisenhower, Nixon, and Reagan administrations. He was an economist at the Chicago School who advocated market dominance and deregulation, strongly opposed wage and price control policies, argued that a free trade system was essential for the United States, and insisted on active policy intervention in climate change. The market believes that Powell’s praise of Schultz could be interpreted as an indirect criticism of Trump’s tariff policy because it is in a position opposite to Trump

Under regulations, Powell is not allowed to comment on interest rates or economic prospects because of the blackout period. Paradoxically, however, the market is expected to pay more attention to each word than ever to find hints hidden in silence when it is unclear whether or not to cut interest rates in December. Some believe that Powell’s attitude of avoiding answers may be interpreted at will by the market

Powell, of course, is known to place more importance on regulations and procedures than Bernanke or Yellen in the past as a lawyer, so he will be extremely restrained from speaking other than the prepared manuscript. However, it is ‘words’ that need to be noted, because recent algorithmic buying and selling tend to increase market volatility. In other words, if Powell says certain words, such as ‘patient’, there is a possibility of an immediate reaction. In other words, the most important thing to be wary of is not Powell’s intention, but the overreaction of the algorithm.

The real signal is not Powell’s mouth, but the content of media articles such as comments by Wsj’s Nick Timiraos. The Fed has historically used the media during the blackout when there was an urgent need to revise market expectations. If Powell has not talked about anything and the market mood increases volatility, it needs to pay attention to the media during the day.

In conclusion, Powell’s remarks themselves are expected to end up as meaningless events. This is because he thoroughly avoids mentioning policies. The same goes for Vice Chairman Bowman’s remarks at this evening’s parliamentary hearing (a hearing of financial regulators). However, since the market can give meaning to each word, it seems that it should respond by paying attention to changes in U.S. after-hours futures. Rather, the UBS Global Tech & AI Conference is underway in the stock market, so it is expected to focus more on the contents of the related announcement.