That's a dangerous thing
The market has enormous faith in central banks to pump up asset prices. As for Congress, that's a different story.
Markets are souring today and there are plenty of reasons for that relating to the pandemic and the tough-to-explain huge bounce from the lows.
So what changed today? I look back to the Powell speech and his warnings about what's next:
While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks.
Along with that Powell pledged to do whatever is necessary within the Fed's mandate. However that comment was simply a prelude to his main point, which -- when you read the speech again -- is clear the point of the whole speech:
Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery. This tradeoff is one for our elected representatives, who wield powers of taxation and spending.
This kind of comment hints that behind-the-scenes the Fed isn't confident that it has another bazooka in its arsenal. It's reminiscent of the final years of Draghi's term at the ECB where almost every speech included a portion that badgered governments to do more.
