Scandals and intrigue at the US Federal Reserve

By 22/09/2021News

Gold  1777,795

EURUSD   1,1726

DJIA  33926,50

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DAX  15290,50

While everyone is waiting for the key US Fed meeting, scandalous information has surfaced in the public domain about how Robert Kaplan, head of the Dallas Fed, and Eric Rosengren of the Bank of Boston, were in full swing trading stocks of funds and various companies, making over a million dollars worth of trades.



Of course, this information created a wave of outrage in the trading community. After all, decision makers, knowing insider information on various macroeconomic data, find themselves ahead of everyone else. In fact, such trading is allowed, but only during certain time between meetings. Many people notice that although everything was done correctly according to the law, such actions violate the spirit of the Fed itself.
The whole situation adds fuel to the fire, as Jerome Powell himself, who is up for re-election, has over 100 million USD worth of assets. Of course, these assets are managed by independent individuals, but still any insider information could leak outside the Fed.
The Fed is already under external pressure on this issue. Already now there are demands to tighten the rules so that there are no more such incidents, which completely undermine the credibility of the entire US financial system.
The current scandal puts even more pressure on the Fed to roll back quantitative stimulus. After all, the further the support is pulled, the more the rich will get richer and the poor will get poorer. Controversy may force an unwinding of the tapering plan as soon as this meeting.
Also Biden will very soon have to re-nominate the head of the Fed and he is under pressure from progressive democrats who see the Fed leader as someone who will become more “multi-faceted” and begin to focus on other goals besides inflation and unemployment.
It’s going to be a tough week as the markets are ready to act. Many believe that the current situation gives a “buy bottom” signal, but there are so many contradictions. Everyone knows that markets rise slowly and fall very quickly. So it is worth waiting for the Fed’s decisions and the press conference results. Then the markets will have to digest all the information. At such moments, volatility can increase many times. Therefore, in most cases, it is worth refraining from entering the market until the market decides where to move next.

08.00 Bank of Japan press conference on monetary policy
20.00 US Federal Reserve interest rate decision
20.30 US Federal Open Market Committee press conference

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