Transcript:
Easan Arulanantham:
Chairman Powell’s term is ending in February. How does that kind of play into the market, too?
Tom Vaughan:
Yeah. This is a question that came in, I think this is kind of interesting. So Chairman Powell is the chairman of the Federal Reserve. So the Federal Reserve, they do lots of different things, but the biggest thing that they do here, that affects the stock market, is set interest rates. And they have some stimulus programs that they’ve done some of these downturns to try to, stimulate the economy. In particular, buying $120 billion worth of bonds. … It’s a position that the party in power can put into place. They can change Chairman Powell in February to somebody else, or reinstate him. He’s got a Wall Street background. The market has done quite well, during the period of time that he’s there. This is the first Federal Reserve group, that in my opinion, has ever gone down the path they’re going down now, which is, hey, we’re gonna let… inflation run a little bit, in an attempt to get things going economically. And so… I think that’s a really key area, very important, because in the past, the Federal Reserve has just rapidly raised rates in an attempt to keep inflation under control, and brought down the entire world economy twice: 2000 & 2008.
And so this particular Federal Reserve has said something different, and they’re working in a different way. They announced this last summer. First time I’ve ever heard anything like this. So, I do like that. I actually hope that they do reinstate him. But here’s the key piece. In the end, it won’t really matter to the market. We’ve had lots of changes within Fed Governors; some the market’s like more than the other. And the basics of the market are still there, as far as that goes. And so, theoretically, you could actually get somebody in there who is even more stimulative to the stock market and what have you, too. So really, it’s not a big deal. The big deal is that the market, it doesn’t like an uncertainty. It doesn’t like uncertainty about the debt ceiling increase. It doesn’t like uncertainty about who’s going to be the Fed Governor. And both of those are kind of coming up right now, and again, that’s partly why we’re seeing some of these, downturns that we’re seeing right now, too.