Overall market is overvalued but individual stocks can perform, says Moses Ventures' Danny Moses
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Yahoo
11 minutes ago
- Yahoo
US stocks tend to gain around Fed's Jackson Hole summer conference, analysis shows
By Lewis Krauskopf NEW YORK (Reuters) -U.S. stocks have tended to fare well around the Federal Reserve's Jackson Hole gathering in August, according to a historical analysis from DataTrek Research, although the market has seen sizable moves in both directions in recent years. The Fed's annual Wyoming research conference is set for Thursday through Saturday, and Chair Jerome Powell's speech on Friday is expected to be the main event for markets. DataTrek looked at the benchmark S&P 500 in the five trading days before and after the Fed chair's speech since 2010. The index gained an average of 0.9% over the period, with the bulk after the speech. "This suggests that markets get incremental clarity from the chair's speech, which in turn boosts equity valuations," Nicholas Colas, DataTrek's co-founder, said in a research note. This year, the S&P 500 has slipped in the lead-up to the speech so far, Colas said in the note published early Tuesday. "This goes against the usual pattern, so we would not be surprised to see the index rally modestly through Thursday," he said. One notable exception to the trend was in 2022, when the index slumped 7.4% in the 10-day period. That year at Jackson Hole, Powell warned of slower growth as the Fed fought high inflation. The S&P 500 fell over 19% for the full year 2022 as the Fed raised interest rates. In 2023, the index gained 3.3% in the studied period. DataTrek noted the S&P 500 fell in 2013 and 2015 when Fed chairs Ben Bernanke and Janet Yellen did not attend the symposium. This year, investors are eager to see if Powell reinforces expectations of a central bank interest rate cut at its September 16-17 meeting. Recent weak labor market data bolstered those expectations. Fed Fund futures on Tuesday were pricing in an 84% chance of such a move, according to LSEG data.
Bloomberg
13 minutes ago
- Bloomberg
Bowman Says ‘Change Is Coming' to How Fed Views AI and Crypto
Banks and regulators must embrace the benefits of new technologies such as artificial intelligence and crypto or risk diminishing their role in the economy, said US Federal Reserve Governor Michelle Bowman. 'Change is coming,' said Bowman, the central bank's top bank watchdog, in prepared remarks for the Wyoming Blockchain Symposium. Ideally, regulators will allow new uses to 'proliferate in a way that benefits the banking system,' she said. 'If this is not our approach, then we risk the banking system becoming less relevant to consumers, businesses and the overall economy.'
Yahoo
41 minutes ago
- Yahoo
Powell's Jackson Hole speech could setup a policy tweak that lasts well beyond his tenure
When Federal Reserve Chair Jerome Powell gives his last speech in Jackson Hole, Wyo., this Friday, investors will be listening for whether he signals an interest rate cut next month. But Powell could lay out more overarching changes to the central bank's dual mandate that will last long after his tenure is up next May — and mark part of his legacy. Powell will share his outlook for the economy at Jackson Hole. But he is also expected to lay out changes to the central bank's policy framework review, which articulates the Fed's strategy and commitment to fulfilling its congressional mandate for stable prices and maximum employment. In particular the central bank is expected to drop so-called average inflation targeting, a policy put in place pre-pandemic when inflation was running low and Fed officials wanted to avoid deflation. The strategy laid out that if inflation ran below 2% in years past, the Fed would tolerate it running above 2% in the future on the theory that it averages out. Given the recent spout of inflation, and the risks it poses to inflation expectations and consumer sentiment, the Fed is expected to drop that and focus on an inflation target of simply 2%. Read more: How jobs, inflation, and the Fed are all related Powell signaled the change in a speech in May. 'In our discussions so far, participants have indicated that they thought it would be appropriate to reconsider the language around shortfalls,' Powell said. 'And at our meeting last week, we had a similar take on average inflation targeting.' The Fed first created its monetary policy framework in 2012, which it adjusts every five years. The Fed is revisiting changes made to its strategy for monetary policy, tools, and communication last changed in 2020 before the pandemic set in. Just as the changes announced back in 2020 had implications for monetary policy actions over the past five years, so could the changes Powell announces Friday send ripples for years to come. Some Fed watchers believe the Fed's strategy of letting inflation run a bit above 2% to make up for previously lower inflation led in part to the central bank's delayed action to raise rates when inflation took off following the pandemic. The thought that the inflation from supply chain bottlenecks was temporary led the Fed to hike rates at the most aggressive pace since the 1980s. 'While the adoption of the new framework in 2020 was not the primary factor behind the Fed's delay and the substantial inflation overshoot, it contributed to this outcome,' said Matt Luzzetti, chief US economist for Deutsche Bank. Luzzetti says, as a result, he expects Powell's speech to restore a more preemptive strategy for monetary policy, along with recognizing risks of supply shocks and a return to a balanced view of inflation and the job market. James Fishback, CEO of hedge fund Azoria, agreed, noting that Chair Powell needs to acknowledge what he calls the 'mistake' of average inflation targeting, likening it to rushing into the emergency room with a 110-degree fever and being told the doctors won't treat you because, for the past two weeks, your average body temperature was a healthy 98 degrees. 'The Great Inflation of 2021–2022 did not begin in a supermarket or at a gas pump — it began in August 2020 in Jackson Hole, Wyoming,' said Fishback. 'In his new framework review announcement on Friday, Chair Powell must acknowledge the tragic mistake of Flexible Average Inflation Targeting and strike it from the Federal Reserve's playbook if the Fed is to faithfully fulfill its dual mandate.' Powell noted in his May speech that inflation could be more volatile going forward than in the 2010s and that the US may be entering a period of more frequent, and potentially more persistent, supply shocks. 'The economic environment has changed significantly since 2020, and our review will reflect our assessment of those changes,' Powell said in a speech in May. Powell also stressed enhancing the Fed's formal policy communications, particularly regarding the role of forecasts and uncertainty. Investors will watch for whether the Fed rolls out changes to its quarterly Summary of Economic Projections, which contains the famous 'dot plot,' a compilation of each member of the FOMC's expectations for interest rates that year. Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
