Cliff Notes - 60 Minutes Doug E Fresh You're On!

May 21, 2020

In This Week's Update:

  • Growing up as a teenager in Baltimore MD in the late 1980’s I was all over the initial rise of rap music.  Not the horrible trash out in recent years, but the good stuff from Run DMC, Sugar Hill Gang, Eric B and Rakim and others.  One famous song was “6 Minutes Doug E Fresh You’re On”….the stage to rap.  All the kids starting using “fresh” to denote something awesome and cool.   2020’s Doug E Fresh is none other than Fed President Jerome Powell – and he was super fresh for 60 Minutes.   His comments had the market up over 3% yesterday to open the  week, following last week’s fade.
  • According to Blaine Rollins at 361 Capital:  “Jerome Powell’s appearance on ’60 Minutes’ added $2.5 trillion in value to the global equity markets on Monday. That is the same value as 4.5 million pairs of Jordan-signed 1997 NBA Finals “Flu Game” sneakers which auctioned off at $560,000 this weekend. I fully expected the markets to open lower Sunday night as the White House’s saber rattling with China intensified during the Sunday morning talk shows. And, while market participants knew Powell’s thinking, and saw some of the “60 Minutes” text and sound bites, we didn’t anticipate his delivery to be so Jordanesque.
  •  Of course, it did help that he appeared on the highest rated show on prime-time TV, thus getting one of the biggest soapboxes available to talk directly to the American public. With Scott Pelley slinging socially distanced questions at the Chairman, he answered confidently and truthfully about the potential difficulties ahead and the large cache of tools available to the Fed to keep the U.S. economy moving in the right direction. He also further put to rest the notion of using negative interest rates. So, let’s get Jay-Pow a ‘Big Air’ license plate to go with his incoming Nobel Prize, and Time Man of the Year award. The U.S. economy and our IRAs have already nominated him for every 2020 award.
  • Chairman Powell did note in his ’60 Minutes’ interview that at some point in the future when the economy is better, the U.S. will need to repay these emergency debts. This will be no small feat. Many trillions will need to be deposited back into the piggy bank when this is all done. Many top market seers are turning their attention toward how to remove trillions from the economy and become more cautious. They are entirely correct to do so. It is easy to create unlimited liquidity as we have done—which is a major reason why the credit and equity markets have stabilized and recovered. So, what do you think will happen when we try and put the trillion-dollar genies back into the lamp?

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