Jerome Powell
Referenced extensively in context of post-COVID rate decisions and the Sea Change
Biography
Jerome Powell (born 1953) has served as Chairman of the Federal Reserve since 2018, appointed by President Trump and reappointed by President Biden. He was previously a lawyer, investment banker at Carlyle Group, and Fed Governor. He holds no economics PhD — unlike most Fed Chairs — a distinction that matters primarily for symbolism.
Powell appears in 11 Oaktree memos with 48 total mentions — concentrated almost entirely in the 2022-2025 period, reflecting the centrality of the Powell Fed's actions to Marks' most consequential recent thesis: the Sea Change. He is the most heavily cited living public figure in the recent corpus, and his actions are analyzed not as political events but as investment data.
The arc of those mentions tells its own story. Powell first enters the corpus in 2019, when his Fed reversed course on rate increases and Marks used the episode to dissect how investors misread central bank signals. He dominates the 2020 memos, when the COVID-19 response produced the most aggressive monetary intervention in Federal Reserve history and Powell's public assurances became market events in themselves. And he anchors the later discussions of forward guidance, inflation, and the rate regime — the raw material of the Sea Change. Across all three episodes, Marks' posture is consistent. He insists he is not an economist, not an expert on monetary policy, not a Fed watcher — just a casual observer. Powell matters to him as a case study in how markets process macro news, not as a policymaker to be graded.
Key Stories
The Rate Shock of 2022 — The Federal Reserve increased the federal funds rate from near zero in early 2022 to over 5% by mid-2023 — the fastest rate increase cycle in 40 years. This was the proximate trigger of what Marks calls the Sea Change: the end of the 40-year declining rate regime. Markets had been built on the assumption of perpetually low rates; the Powell Fed's actions revealed that assumption to be wrong. The consequences — for private equity valuations, for leveraged loan performers, for every asset priced on cheap debt — are still working through the system.
The Macro Agnosticism Test — Marks does not make predictions about where Powell will take rates from here — consistent with Oaktree's explicit macro agnosticism. But he uses the Powell era as the clearest recent example of why macro forecasting is so difficult: virtually no one predicted the speed or magnitude of the 2022 rate increases, including many of the people at the Federal Reserve. This reinforces the core principle: focus on where we are, not where we will be.
The Fiscal Context — Multiple 2024-2025 memos analyze the constraint Powell faces: fiscal deficits running at unprecedented peacetime levels in the US create persistent inflationary pressure that limits the Fed's ability to cut rates aggressively. Marks uses this context — not as a rate prediction but as a structural argument — to support the Sea Change thesis that even if rates decline from current levels, a return to the zero-rate era is unlikely.
The 2019 Pivot — Powell's Fed entered 2019 having raised rates through 2018, a decision that earned him a place on the list of people experiencing President Trump's wrath. When the Fed then departed from its announced program of increases early that year, Marks identified the reversal as a main contributor — if not the main contributor — to the powerful rally that followed, and used the episode to teach second-level thinking. A rate cut is not simply a buy signal, he argued in "On the Other Hand" (2019): it also means the Fed thinks trouble is looming, and it does not guarantee the problem will be solved. Eighteen months after the first cut of September 2007, he reminds readers, the S&P 500 finally bottomed — down more than 50% from where it stood on the day of that first cut. The Powell of 2019 is, in Marks' hands, an illustration of how much interpretation hides inside an apparently simple policy action.
"We Will Not Run Out of Ammunition" — The COVID-19 crisis made Powell a central figure in the memo corpus. In March 2020, two emergency cuts totaling 150 basis points took the federal funds rate to nearly zero, and Powell went on national television to promise that the Fed would not run out of ammunition — an assurance Marks credits, in "The Anatomy of a Rally" (2020), with having a very positive effect on panicked markets. In "Knowledge of the Future" (2020), Marks records the moment with something close to awe: even with interest rates at zero, the Fed's firepower was limitless. But the observation cut both ways. In "Nobody Knows II" (2020), written in the first days of the crash, he had warned about the limits of that ammunition — and about the unknowable long-term impact of an ever-expanding Fed balance sheet.
The Powell Put — By mid-2020, investors had concluded that the Fed would always rescue markets: a "Powell put" stood behind asset prices, the successor to the Greenspan put of the late 1990s/early 2000s and the Bernanke put induced by the Global Financial Crisis. Marks treats this belief as a pivotal psychological fact — the conviction that the Fed has no choice but to keep markets levitated helped flip sentiment from fear of losing money to fear of missing out, the transition he considers decisive in determining the mood of the market. In "Coming Into Focus" (2020), he states the moral hazard directly: by dramatically lifting the markets, the Fed may have caused some people to believe that it will always do so.
The Forward Guidance Retreat — In "Illusion of Knowledge" (2022), Marks' most direct attack on macro forecasting, the Fed's forward guidance program is exhibit A: a disaster that strained the central bank's credibility, built on data the Fed had a miserable record of forecasting. Powell himself seemed to agree that providing estimates of where the Fed sees interest rates, economic growth and inflation should be junked. For Marks, the episode is nearly perfect evidence for his thesis — if the Federal Reserve, with its vast staff of economists, cannot reliably forecast its own policy inputs, the investor's edge cannot come from macro prediction either.
The Expanding Mandate — In "The Winds of Change" (2021), Marks notes almost wryly that progressive Democrats announced opposition to Powell's reappointment because they thought him insufficiently active on climate change — leaving a Fed expected to control inflation, foster growth and employment, support markets, and fight climate change all at once. The question he poses — how many roles can one institution have and still maintain a coherent effort? — is Marks at his most characteristic: skeptical of mission creep and alert to the political pressures now surrounding central banking.
Impact on Marks' Work
The Sea Change Catalyst: Powell's rate increases are the proximate trigger of the most important investment thesis in Marks' recent writing. Understanding the Fed's actions is essential to understanding Marks' current portfolio positioning.
The Macro Agnosticism Illustration: The inability of markets (and the Fed itself) to predict the 2022 rate shock illustrates exactly why Marks does not make directional macro bets — the uncertainty is too high and the models too unreliable.
The Fiscal-Rate Interaction: Marks' analysis of the interaction between fiscal deficits and monetary policy represents one of the most sophisticated macro arguments in the recent corpus, grounded in structure rather than in prediction.
The Fed's Own Uncertainty as Evidence: Marks returns repeatedly to Powell's public admissions of uncertainty — "I can't give you an exact number or an exact time," he said of inflation in June 2021 — as confirmation that honest forecasters disclaim the very precision markets demand of them. The Fed chair's humility under questioning is, for Marks, more instructive than any forecast the Fed could publish.
The Psychology of Central Banking: Marks' longest sustained engagement with Powell — "On the Other Hand" (2019) — is ultimately about psychology rather than economics. Rate cuts work partly because people believe they will work; when a cut is announced, people take it on faith that the economy will strengthen, and their resulting behavior produces the desired response. This means the Fed must manage expectations as much as it manages the economy — psychology, not just economics — and Powell's news conferences are, in this reading, exercises in applied investor psychology.
Key Passages From Marks' Memos
"In fact, Powell's 2018 decision to continue his predecessor's rate increases and quantitative tightening earned him a place on the list of people experiencing President Trump's wrath."
— On the Other Hand (2019)
"Powell did say this week, 'we are also mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment. Doing so would risk adding even more uncertainty to the outlook.'"
— On the Other Hand (2019)
"Mr. Powell has made clear that even with interest rates at zero, the Fed's firepower is limitless."
— Knowledge of the Future (2020)
"Investors have been cheered by the fact that today's Fed seems to be offering a "Powell put," a successor to the Greenspan put of the late 1990s/early 2000s and the Bernanke put induced by the Global Financial Crisis."
— The Anatomy of a Rally (2020)
"The Federal Reserve's forward guidance program has been a disaster, so much so that it has strained the central bank's credibility."
— Illusion of Knowledge (2022)
"That day, Fed Chair Jerome Powell confirmed that the Fed was moving closer to a rate cut, and things appeared to be on track for economic growth and further stock market appreciation."
— Mr. Market Miscalculates (2024)
Referenced In
Source: Howard Marks Knowledge Base — Oaktree Capital Management memos 1990–2025