With leaked trades in their personal accounts already costing two Fed presidents their jobs, and a third - vice chair Richard Clarida - currently on the ropes amid speculation he will soon follow, a few weeks ago we joked that if forces within the Fed want to get rid of all the hawks, they should just leak Esther George's - the Fed's last remaining uberhawk - trading record.
If the Fed wants to get rid of all the hawks, they just need to leak Esther George's etrade blotter
— zerohedge (@zerohedge) September 28, 2021
To be honest, not even we expected that the progressive American Prospect magazine (initially called The Liberal Prospect), the domain of such ultra-leftists/socialists as Robert Reich, Robert Kuttner, and Paul Starr, and whose interns include Bernie Sanders advisor Matt Duss, Ezra Klein and Matt Yglesias, would try to kill Powell's candidacy by leaking his trades in hopes of getting the Fed's resident socialist, Lael Brainard, to replace Powell amid the growing storm over Fed trades.
But that's precisely what happened this morning, when the Prospect revealed that, amid 26 publicly disclosed transactions in 2020, Powell sold between $1 million and $5 million worth of stock from his personal account on October 1, 2020, a sale of the Vanguard Total Stock Market ETF, or VTI, according to disclosure forms reviewed by the Prospect and subsequently leaked in hopes of crushing Powell's renomination chances.
All of the other leaked transactions are also sales, including another $50-$100K sales from the VTI on Sept 21, just days after the Fed's Sept 15-16 2020 FOMC meeting, as well as a series of Sales anywhere between $15K and $250K on Dec 18, jus 2 days after the Fed's Dec 16 FOMC meeting, in funds such as the MSCI EAFE ETF (EFA) where powell sold $15K-$50K, the RUT Russell 2000 ETF (for $100K-$250K), the Goldman US Equity Dividend and Premium Fund (GSPKX) and so on. There were also a handful of purchases, but none in the ballpark of the $1,000,000 - $5,000,000 sale noted above.
Powell's full transaction breakdown is below:
To be fair, the large VTI sale ($1-$5MM) occurred just as the Dow tumbled, but before stocks staged a remarkable surge... and have continued to surge to this day, as they more than doubled from the March 2020 lows. So while one can argue that Powell is a terrible trader, he was hardly frontrunning the Fed's market-friendly actions.
That said, the optics of the Fed chair actively trading at a time of historic market turmoil, will hardly encourage Liz Warren to support Powell.
As the Prospect notes, Powell’s stock sale came against a background of President Trump balking over an urgently needed new economic stimulus package. A day later, Trump announced to the public that he had tested positive for COVID. Additionally, meeting logs show that Powell had been in contact with Treasury Secretary Steven Mnuchin four times on October 1. Powell had been pressing the administration to support more fiscal stimulus, so that the sole responsibility for rescuing the economy would not be on the Fed and monetary policy.
In a speech October 6, after his sale of stock, Powell warned that failure to enact stimulus could have “tragic” economic consequences. He said, “The expansion is still far from complete … Too little support would lead to a weak recovery, creating unnecessary hardship.”
Judging by the trillions in fiscal stimulus that followed, Congress was more than happy to listen and to take advantage of the Fed's monetization of every dollar in debt issued by the US Treasury.
One final point to note: Powell, as everyone knows, is a multi-millionaire with a net worth between $17 and $55 million, having worked much of his career on Wall Street and especially at Carlyle, where he was a partner between 1997 and 2005. His filing confirm his wealth, and nothing wrong with that, but in what may be a problem for Powell, the leaked filing reveals among many other assets, substantial holdings, i.e., the $5 to $25MM, in in the SPY ETF, an asset which clearly is moved by the Fed's announcements and decisions, and which we are confident will spark howls of fake outrage from Senate progressives who demand Powell's ouster and immediate replacement with Democrat socialist Lael Brainard.
Not surprisingly, Powell's odds to be reconfirmed by the Senate just tanked, plunging from 80 to 61...
... while those of Brainard are surging.
Powell's full leaked financial disclosure form is below (pdf link)
Mon, 10/18/2021 - 11:14