{"id":196732,"date":"2024-08-16T16:20:14","date_gmt":"2024-08-16T16:20:14","guid":{"rendered":"https:\/\/ibkrcampus.eu\/campus\/uncategorized\/will-powell-channel-larry-david\/"},"modified":"2024-08-19T11:04:54","modified_gmt":"2024-08-19T11:04:54","slug":"will-powell-channel-larry-david","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.eu\/campus\/traders-insight\/securities\/macro\/will-powell-channel-larry-david\/","title":{"rendered":"Will Powell Channel Larry David?"},"content":{"rendered":"\n<p>Yesterday\u2019s piece, equating the economy to a mattress (<a href=\"https:\/\/www.interactivebrokers.eu\/campus\/traders-insight\/securities\/macro\/hard-soft-bumpy-the-market-goes-to-the-mattresses\/\">hard, soft, bumpy?<\/a>), seemed to garner some attention and follow-up questions.\u00a0The more I think about and discuss the likely outcomes for next week\u2019s Jackson Hole meeting, the more I return to this concern: that Chair Powell will tell us to \u201c<a href=\"https:\/\/www.bing.com\/ck\/a?!&amp;&amp;p=98e13d5822d66e84JmltdHM9MTcyMzc2NjQwMCZpZ3VpZD0wNjIzMzAxNS1jOGMzLTY3OTctM2I1Ny0yNGIxYzkzMzY2YzUmaW5zaWQ9NTI2MA&amp;ptn=3&amp;ver=2&amp;hsh=3&amp;fclid=06233015-c8c3-6797-3b57-24b1c93366c5&amp;psq=curb+your+enthusiasm&amp;u=a1aHR0cHM6Ly93d3cuaW1kYi5jb20vdGl0bGUvdHQwMjY0MjM1Lw&amp;ntb=1\">Curb Your Enthusiasm<\/a>\u201d.<\/p>\n\n\n\n<p>We wrote:<\/p>\n\n\n\n<p><em>It hardly seems appropriate for Chair Powell to re-affirm [the market\u2019s] likelihood [of more than three cuts this year] at his Jackson Hole address next week given that it would put him well ahead of the last Summary of Economic Projections just weeks before the next one is due. Remember, just two years ago he threw a big bucket of cold water on market hopes for a less restrictive rate path as the FOMC was busy raising rates.&nbsp;&nbsp;<\/em><\/p>\n\n\n\n<p>Someone correctly reminded me that most Jackson Hole conferences are relatively uneventful affairs for the stock market, yet I keep harping on the most recent exception to that pattern.\u00a0Indeed, most of the time investors are in synch with the prevailing Fed policies. But now I think we\u2019re not, just like in 2022. Remember, at that time the prevailing market hope was for a Fed \u201cpivot\u201d, but\u00a0we were skeptical\u00a0that Powell\u2019s speech would acknowledge one:<\/p>\n\n\n\n<p><em>If the parade of economists interviewed in the media are any indication, Chair Powell should come out forcefully with a discussion about further rate hikes and quantitative tightening.&nbsp;&nbsp;Markets seem to be pricing in a cessation of rate hikes and a potential cut down the road.&nbsp;&nbsp;From whom did they get idea, pray tell?&nbsp;&nbsp;<\/em><\/p>\n\n\n\n<p>And by the way, we\u2019re STILL awaiting that pivot!&nbsp;We\u2019ve gotten a rhetorical pivot, with the FOMC and Chair acknowledging the possibility and even the likelihood that rate cuts are imminent.&nbsp;But once again investors are ahead of the Fed.&nbsp;&nbsp;<\/p>\n\n\n\n<p>While that has been the case all year \u2013\u00a0remember the 6-7 cuts\u00a0that were expected at the start of this year? \u2013 the stronger than expected economy made those cuts unnecessary.\u00a0Fortunately.\u00a0A strong economy is always better for stock prices than one weak enough to require aggressive cuts.\u00a0Now that we are seeing signs of slowing, it is reasonable to hope for less restrictive monetary policies, and the Fed has not dissuaded us from that hope.\u00a0But the hopes may need recalibration, and there is no better opportunity for Powell to do that than Jackson Hole.<\/p>\n\n\n\n<p>This seems to be an out of consensus view right now.\u00a0If folks were truly concerned, then we wouldn\u2019t see VIX trading below 15.\u00a0It appears few traders are willing to anticipate volatility or demand hedging protection ahead of Jackson Hole and the following week\u2019s Nvidia (NVDA) earnings.\u00a0I guess the market is more willing to view Powell in his more typical \u201cGoldilocks\u201d role than as a curmudgeonly Larry David.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Yesterday\u2019s piece, equating the economy to a mattress (hard, soft, bumpy?), seemed to garner some attention and follow-up questions. The more I think about and discuss the likely outcomes for next week\u2019s Jackson Hole meeting, the more I return to this concern: that Chair Powell will tell us to \u201cCurb Your Enthusiasm\u201d.<\/p>\n","protected":false},"author":4,"featured_media":8074,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":true,"footnotes":""},"categories":[145,146,147,18,8,12,153,148,7],"tags":[2134,311,291,314,383,316],"contributors-categories":[149],"class_list":{"0":"post-196732","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ibkr-market-insights","8":"category-macro","9":"category-north-america","10":"category-options","11":"category-region","12":"category-securities","13":"category-stocks","14":"category-text-articles","15":"category-traders-insight","16":"tag-chair-powell","17":"tag-fed","18":"tag-macro","19":"tag-market-outlook","20":"tag-stock-market","21":"tag-stocks","22":"contributors-categories-interactive-brokers"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Will Powell Channel Larry David? | Traders&#039; Insight<\/title>\n<meta name=\"description\" content=\"Yesterday\u2019s piece, equating the economy to a mattress (hard, soft, bumpy?), seemed to garner some attention and follow-up questions. 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