By Pam Martens and Russ Martens and cross-posted from Wall Street on Parade
The real drama in the market yesterday was not the 2:00 p.m. release of the Federal Open Market Committee (FOMC) statement to hold rates steady but what happened about twenty minutes into the press conference that began at 2:30 p.m. when Fed Chairman Jerome (Jay) Powell began to answer questions from an intrepid group of reporters. The youthful, fresh-scrubbed faces from well-known media outlets presented a paradoxical contrast to the gritty questions they lobbed at the man who clearly understood that losing his cool could tank the stock market.
But despite Powell’s calm exterior, the stock market didn’t like the questions or the responses from Powell. Opacity is treasured by the masters of today’s stock market. Too much transparency or honesty sends hedge funds and dark pools running for the safety of Treasury notes. Not only did the Dow Jones Industrial Average begin a sharp descent about 24 minutes into the press conference (see chart below) but so did each of the five largest Wall Street bank stocks: JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley.
So exactly who were these truth-seeking reporters and what was the nature of the uncomfortable questions they asked?
About twenty minutes into the press conference, Victoria Guida, a reporter from Politico, voiced some of the same concerns that Wall Street On Parade expressed on March 12 regarding the fact that the Fed had rushed through a rule change that effectively said that the Federal Reserve Bank of New York’s bank examiners could not flunk the mega Wall Street banks on their stress tests even if there were serious lapses in risk management like failing to report and/or control money laundering, insider trading, bribery, or market rigging. That’s a big gift to the behemoth Wall Street banks who are currently under investigations for money laundering and market rigging…