US equities retreated on Thursday ahead of Fed Chair Powell's annual policy speech in Jackson Hole, Wyoming. Large caps and small caps declined: S&P 500 (-0.89%) vs. Russell 2000 (-0.95%). MSCI Emerging Markets (EEM) and MSCI EAFE (EFA) dropped 1.24% and 0.59% respectively.
Premium Markets: Jackson Hole is Very Important
The Fed’s annual Jackson Hole conference kicked off this Thursday, with the main focus on "Reassessing the Effectiveness and Transmission of Monetary Policy." The highlight for markets is Fed Chair Jerome Powell's speech scheduled for Friday at 10 a.m. ET. Powell's remarks are expected to provide critical insights into the Fed's economic outlook. Following his speech, the conference will feature various research presentations, panel discussions, and speeches by other policymakers.
The key event for markets is Chair Powell’s speech on the economic outlook at 10am New York time on Friday, August 23.
Q- What is their current Fed forecast?
Three 25 basis point rate cuts in a row for September, November, and December.
Q- What does GS expect Chair Powell to say?
More Dovish than the FOMC
Q- Possible surprises?
If Powell wants to be Hawkish, he will focus on FCI to not cut
Q- What’s All this about “Reassessing the Effectiveness and Transmission of Monetary Policy” stuff?
The biggest debtor in the economy, the federal government, hasn’t cut spending or raised taxes in response to higher interest costs, further slowing the transmission of higher rates to the broader economy.
We think the JHole theme is a gift wrapped opportunity to lay the blame for rate hike lag of effect right at Yellen’s feet. We hope he opens the gift.. Other than that, Essentially its a follow up on what they said last year and an explanation on why it took so long for rates todo their job..
"Two Federal Reserve officials said they believe it’s appropriate for the US central bank to begin lowering interest rates soon, and that the pace of subsequent cutting should be “gradual” and “methodical"... Bloomberg
"Cruise’s self-driving vehicles will soon be available on ride-hailing app Uber, as the General Motors-owned group tries to reverse its fortunes after a series of setbacks. FT
"U.S. home sales rose slightly in July, ending a four-month streak of declines, and prices remained near record highs at a time when the cost of housing has become a hot-button election issue..WSJ
Politics/Geopolitics:
EU foreign policy chief Borrell said he discussed with the Iranian Foreign Minister the cessation of military cooperation with Russia and defusing regional tensions, according to Al Jazeera.
Ukrainian drone attempted to attack Kursk nuclear plant; the drone was shot down near the plant, via Tass citing sources
Ukraine’s Air Force said it used a US-made GBU-39 bomb to strike a Russian military target in Russia's Kursk region.
NATO air base in the German town of Geilenkirchen has raised its security level based on intelligence information indicating a potential threat, according to Reuters.
Some headlines via NewSquawk or DataTrek
Data on Deck: Jackson Hole
MONDAY, Aug. 19 9:15 am Fed Governor Christopher Waller welcoming remarks 10:00 am U.S. leading economic indicators July -0.4% 0.2% TUESDAY, Aug. 20 1:35 pm Atlanta Fed President Raphael Bostic speech 2:45 pm Fed Vice Chair for Supervision Michael Barr speech
WEDNESDAY, Aug. 21 2:00 pm Minutes of Fed's July FOMC meeting
THURSDAY, Aug. 22 S&P flash U.S. services PMI Aug. 10:00 am Existing home sales July 3.95 million 3.89 million
FRIDAY, Aug. 23 10:00 am Fed Chair Jerome Powell speech at Jackson Hole retreat 10:00 am 1
