Risk Warning

Before I mention complete-the-cycle trade, I need to address Powell & the Fed. Seeing Fed chair Powell speaking today on a panel next to Ben Bernanke struck me how much more transparency, communication, forward guidance and all sort of other means of reaching out to the public has emerged from the Federal Reserve, compared to the Bernanke days nearly a decade ago. But even with the improved communication and policy tools (forward guidance helped lift yields before the start of rate hikes), the Fed remains in the dark and with reduced firepower. Here's why and how.

Powell highlighted today the challenges of monetary policy in terms of tools and outlook, pointing to the banking turmoil along with the effects of the sharpest monetary tightening in the history of the Fed and the threat of sticky inflation. Not to mention an unmovable debt ceiling in the face of staunch congressional dissent (even more than during the 2011 budget standoff).