Stocks are surging along with gold, while the dollar is tanking and Treasuries are rallying. The catalyst is clear: Remarks from Federal Reserve Chair Jay Powell this morning.
Today was expected to be one of those “for all the marbles” days in markets. That's because Wall Street knew Powell would use his highly anticipated speech at the Kansas City Fed’s Jackson Hole Symposium to share his thoughts on when the Fed would start cutting interest rates, how much it might cut by, and what data and market forces would guide its policy decisions.
He did NOT disappoint. Specifically, Powell said: “The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.” That means a September cut is a lock. It also means that cut COULD be a 50-basis-point one (though that will depend on data released between now and then).
The rest of the speech makes clear Powell thinks inflation is going back to 2% and that the labor market has cooled notably. Translation: He is essentially committing to a CYCLE of rate cuts, rather than just a “one or two and done” kind of adjustment. Rate futures markets were already pricing in a series of cuts that would lower the federal funds rate from its current range of 5.25%-5.5% to 3.25%-3.5% by next summer. They may price in even deeper cuts in the coming days given this speech and the tone of recent data.
Bottom line? This gives added momentum to my "Be Bold" investing thesis. I've shared more details about how to translate that into specific portfolio moves at MoneyShow events over the past year and a half. I hope you'll join me in Toronto, Orlando, and Sarasota before the end of the year for my latest thoughts and ideas!
Finally, the Democratic National Convention wrapped up last night with nominee Kamala Harris laying out her case for the presidency. Now, the race to the White House will intensify – with the Harris/Trump debate set for Sept. 10 the next major event on the calendar. Most polls show a tight race, one that’s much closer than if Biden had remained the Democratic candidate.
