Powell’s testimony to the Congressional economic committee today was a reminder for markets that the Fed has its foot on the gas.

Remember, in just the past 11 months, the Fed has not only stopped raising rates, but they’ve cut rates three times. And it has gone from shrinking the balance sheet (quantitative tightening) to expanding the balance sheet again, with an eye toward buying almost half-a-trillion dollars worth of Treasury bills by the second quarter of next year.

Why does the Fed have its foot on the gas? To hedge against the risks of an indefinite trade war. An indefinite trade war can erode confidence (which it has), which can slow economic activity (which it has). And despite the signals of an impending “limited” deal, the Fed has the luxury, given the low inflation environment, to take the position of assuming the worst-case scenario. It should be there until given a good reason not to be (like a trade deal, followed by booming data).

Remember, it has told us for the entire year that it will do whatever it takes to sustain the economic recovery. It’s an aggressive statement, and they have indeed taken an aggressive stance.

The intent is to promote confidence, promote risk taking, which promotes higher stocks. With that, we get another new record high close today. That puts us up 23% on the S&P 500. And the history of the past decades tells us that, in this highly interconnected global economic recovery, the S&P 500 is not only the barometer of global sentiment, but can also be the driver of global sentiment.