Jun 26, 2019

The Powell predicament

Jerome Powell at the Council on Foreign Relations in New York City. Photo: Spencer Platt/Getty Images

Fed Chair Jerome Powell has been put in a tough situation by President Trump and the market ahead of July's FOMC meeting, with his hand forced in the face of historic uncertainty — but he hasn't done much to help himself.

Why it matters ... The U.S. economy is at a delicate moment: trade and manufacturing data are worsening, jobs growth is volatile and slowing, and the bond market is bracing for the worst while equity investors keep expecting the best.

Driving the news: Powell again sought safety in equivocation on Tuesday, noting during a speech at the Council of Foreign Relations that "the global risk picture has changed ... since May 1, significantly," but also saying "it’s important not to overreact in the short term to things that happen to be temporary or transient."

Be smart: The Fed chair has responded by embracing what Axios' Felix Salmon calls "constructive ambiguity," pushing back against the blueprint created by predecessors Ben Bernanke and Janet Yellen. They dictated the Fed's plans to the market with forward guidance and long-winded policy statements. Powell has reversed course.

  • "Rate guidance as a tool is about the Fed being in front of markets and leading them to where [the Fed] wants to go," Vincent Reinhart, a 24-year Fed veteran who now serves as chief economist at Standish Mellon Asset Management, tells Axios.
  • "December's [FOMC meeting] showed that if you're leading, you are the target of criticism, both from the markets and the president, so they switched to much more data dependence ... and moved from the front of the pack to the back."

The bottom line: Powell is not just fighting Trump's continued criticism, as Axios' Courtenay Brown writes, but also his trade war's negative impact on the U.S. economy, while also having to hedge against a surprise agreement.

  • An "insurance rate cut" in July could not only prove a policy mistake, but further erode Powell's credibility and the Fed's.
  • But not cutting rates will put him in the crosshairs of the president and the market, which has investors pricing in a 0% chance he doesn't do it.

Go deeper: Powell's Fed statements aren't dumbing things down

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Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 7 p.m. ET: 1,094,068 — Total deaths: 58,773 — Total recoveries: 225,519Map.
  2. U.S.: Total confirmed cases as of 6 p.m. ET: 273,880 — Total deaths: 7,077 — Total recoveries: 9,521Map.
  3. Public health latest: The CDC is recommending Americans wear face coverings in public to help stop the spread of the coronavirus.
  4. 2020 latest: Wisconsin's governor called for a last-minute primary election delay. "I think a lot of people cheat with mail-in voting," President Trump said on the 2020 election, as more states hold primaries by mail.
  5. Business updates: America's small business bailout is off to a bad start. The DOT is urging airlines to refund passengers due to canceled or rescheduled flights, but won't take action against airlines that provide vouchers or credits.
  6. Oil latest: The amount of gas American drivers are consuming dropped to levels not seen in more than 25 years, government data shows. Trump is calling on the Energy Department to find more places to store oil.
  7. Tech updates: Twitter will allow ads containing references to the coronavirus under certain use cases.
  8. U.S.S. Theodore Roosevelt: Senators call for independent investigation into firing of Navy captain.
  9. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  10. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Government will cover uninsured patients' coronavirus treatment

Azar at Friday's briefing. Photo: Win McNamee/Getty Images

The federal government will cover the costs of coronavirus treatment for the uninsured, Health and Human Services Secretary Alex Azar said at a White House briefing Friday.

How it works: The money will come from a $100 billion pot set aside for the health care industry in the most recent stimulus bill. Providers will be paid the same rates they get for treating Medicare patients, and as a condition of those payments, they won't be allowed to bill patients for care that isn't covered.

More states issue stay-at-home orders as coronavirus crisis escalates

Data: Axios reporting; Map: Danielle Alberti/Axios

Alabama Gov. Kay Ivey issued a stay-at-home order on Friday as the novel coronavirus pandemic persists. The order goes into effect Saturday at 5 p.m. and will remain in place through April 30. Missouri Gov. Mike Parson also issued a statewide social distancing order on Friday.

The big picture: In a matter of weeks, the number of states that issued orders nearly quadrupled, affecting almost 300 million Americans.

Go deeperArrowUpdated 3 hours ago - Health