There’s something of a ritual performed each time Federal Reserve Chair Jerome Powell speaks to the press: A reporter asks Powell about financial conditions; he says they’ve tightened a lot; the Wall Street crowd snickers.
To them, the notion seems ludicrous. Notwithstanding the selloff the past few weeks, markets have rallied in start-and-stop spurts for four months, swelling equity valuations and making it easier for companies to raise cash in stock and bond markets. The implication is that the Fed is letting investors undermine its efforts to choke off the flow of money and tame inflation.
So why such wildly different conclusions?
