Yesterday was another middling session that saw stocks mostly trade sideways. All eyes were on the “Mag Seven” and mega-cap tech stocks. Within that bunch, only Alphabet (GOOG/L) finished in the green.  Meanwhile, an eclectic mix populated the biggest advancers' list.

Taking on the Heavyweights

Going into yesterday’s session, all market weakness was concentrated in the top ten performers.

Sellers Emerge

In the most basic sense, the market moves down when there are more sellers than buyers. This is particularly true in the Technology (XLK) Sector, where everyone is selling these days, including mutual funds.

And now the Fear & Greed Index has slipped back to where it was in May.

Holding On

The NASDAQ Composite is holding above its 50 and 200-day moving averages and, in some respects, becoming a coiled spring.

All Eyes on Jackson Hole

It feels more like the showdown at the ‘O.K. Corral’ than a confab of central bankers, but when Jay Powell speaks this morning, there is no doubt he will be taking shots at President Trump.

Although I know many brilliant investors who don’t expect much, I believe the market will be hit hard if Powell makes the case for no rate cuts at this moment.

 

Today’s Session

Powell steps up to the microphone in a few minutes.  Wall Street thinks he will set a hawkish tone, but there are lots of variables and nuances that must go into his last speech at Jackson Hole.

Points of Interest

• Inflation
• Labor
• Rates
• Independence
• Balance Sheet

It will be interesting to see if Powell takes veiled shots at President Trump.  I think he might aim at tariffs and trade policy to take his digs, but there is also the notion of Fed’s independence.  On that note, I have to say the Fed is not independent from ideology. Powell made a de facto admission of such, not long ago, when he stated ESG scores and woke metrics, factors determining rate policy, would not happen under his watch.

It will be interesting to see if he mentions Fed Governor Cook, who is under intense pressure over accusation of mortgage fraud.

Cheat Sheet from Goldman

Jackson Hole Impacts

Powell’s impact on stocks and bonds has been dramatic.

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