{"id":232221,"date":"2022-08-24T15:09:10","date_gmt":"2022-08-24T15:09:10","guid":{"rendered":"https:\/\/aptuscapitaladvisors.com\/?p=232221"},"modified":"2022-11-28T22:39:22","modified_gmt":"2022-11-28T22:39:22","slug":"what-to-expect-from-jackson-hole","status":"publish","type":"post","link":"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/","title":{"rendered":"What to Expect From Jackson Hole"},"content":{"rendered":"

The Fed\u2019s annual <\/span>Jackson Hole Economic Policy Symposium<\/span><\/a> takes place on Friday and will open with a speech by Chair Powell at 10am EST. We expect Powell to reiterate that the FOMC remains committed to bringing inflation down and that upcoming policy decisions will depend on incoming data. He will likely pair this with verbiage on slowing the pace of tightening, which he laid out in his July press conference and the July minutes released last week. In addition, we hope to get a few more comments on the pace of Quantitative Tightening (QT) and its expected implications to financial conditions. While the market might view the likely slowdown in hikes as a pivot, we aren\u2019t so sure that is the case.\u00a0<\/span><\/p>\n

 <\/p>\n

Looking Back to the 2021 Speech: What Went Right for Powell \u2026 Well, Not Much<\/b><\/h5>\n

 <\/p>\n

In his 2021\u00a0<\/span>address<\/span><\/a>,\u00a0we think Powell got it wrong in several important ways.\u00a0He asserted that the surge in inflation was \u201c<\/span>likely to prove temporary<\/span><\/i>\u201d, that the low unemployment rate \u201c<\/span>understates the amount of labor market slack<\/span><\/i>\u201d, and that \u201c<\/span>we see little evidence of wage increases that might threaten excessive inflation<\/span><\/i>\u201d.\u00a0 He also endorsed the more inflation-tolerant monetary policy framework that the Fed adopted in 2020 as \u201c<\/span>well-suited to address today\u2019s challenges<\/span><\/i>\u201d. We\u2019d guess he\u2019ll hope to be more prophetic than last year.<\/span><\/p>\n

 <\/p>\n

The Market is Still Trying to Buy \u201cPeak Inflation\u201d and Another Fed Pivot<\/b><\/h5>\n

 <\/p>\n

The \u201cpeak inflation\u201d story has provided relief for risk assets since early July. Coming into Jackson Hole, if the Fed wants to change the narrative of a pivot to easier policy, the communication Friday and over the next month will be critical. The slowdown in month over month inflation (\u201cpeak inflation\u201d) means the pace of rate hikes does not need to continue at the +75bp clip of the past two FOMC meetings, especially considering QT is ramping up (look for a blog next week on this topic). In saying that, we believe monetary policy still needs to continue tightening to bring down inflation\u2026markets are pricing in cuts but our opinion is that we see the Fed Funds rate approach 4% by early 2023).\u00a0<\/span><\/p>\n

 <\/p>\n

\"\"Data as of 8.16.22<\/em><\/p>\n

 <\/p>\n

Regarding monetary policy, we think the Fed will likely avoid pursuing a stop-and-go strategy \u2013 this was a mistake in the 1970s that did not work out well (i.e., it led to stagflation). The FOMC knows this. A policy \u201cpivot\u201d could be slower rate hikes in September through December. However, <\/span>when it comes to rate cuts, the bar is quite high given the macro backdrop<\/b>. An important question now is where will core inflation settle out. The inflation problem hasn\u2019t receded, as we still have the situation of demand in excess of supply. This has generated inflation and is threatening to become entrenched.\u00a0<\/span><\/p>\n

 <\/p>\n

Bill Dudley\u2019s Comments<\/b><\/h5>\n

 <\/p>\n

We are always interested in former Fed officials\u2019 commentary as they are often the best people to listen to if you want an honest assessment of the economy or markets. They are uninhibited by their post and can speak honestly.\u00a0<\/span><\/p>\n

Former New York Fed President Dudley does not disappoint with his comments. In a recent op-ed, he noted how off base Powell\u2019s assessment was at last year\u2019s Jackson Hole meeting. But on Friday, traders will undoubtedly obsess over The Chair\u2019s every word; keep in mind he was touting how temporary inflation would be at last year\u2019s speech.<\/span><\/p>\n

The gist of Mr. Dudley\u2019s commentary was that he expects Powell to emphasize three themes during Friday\u2019s speech:\u00a0<\/span><\/p>\n

 <\/p>\n

    \n
  • The economy still has forward momentum with an extremely tight labor market and unacceptably high inflation.<\/span><\/i><\/li>\n<\/ul>\n
      \n
    • The Fed must tighten monetary policy further to restrain the economy and ease pressure on the labor market.<\/span><\/i><\/li>\n<\/ul>\n
        \n
      • The Fed won\u2019t relent until it\u2019s sure it has done enough, for long enough, to achieve its 2% inflation target.<\/span><\/i><\/li>\n<\/ul>\n

         <\/p>\n

        We agree with Mr. Dudley. And unless Chair Powell is willing to risk being remembered as the new Arthur Burns, the Fed is not done yet!<\/span><\/p>\n

         <\/p>\n

        \"\"<\/p>\n

         <\/p>\n

        Bottom Line<\/b><\/h5>\n

         <\/p>\n

        We must go back to the Fed\u2019s first principles: restoring price stability is key. This has not been accomplished yet, so the FOMC is still looking to slow down demand. It remains tough to believe policy is overly tight given real interest rates are still historically low\/negative. Some softening in the U.S. labor market (unfortunately) looks necessary, though this slowdown has not registered yet in the nonfarm payrolls data.<\/span><\/p>\n

        The U.S. economy is trying to look like 2019, but without a 2019-balanced labor market (and MUCH higher inflation). Labor force participation remains lower & we are running into a demographic wall as time goes by. Even with \u201cpeak inflation,\u201d pressure from sticky components remains firm, and central banks are focused on this risk\u2026 we think Powell will reiterate this on Friday.<\/span><\/p>\n

        <\/i>There isn\u2019t much doubt in our mind that the FOMC will have to slow down from the aggressive +75bp rate hikes. The U.S. economy is weakening (i.e., weak real GDP in 1H of 2022, terrible productivity, money supply shrinking). The U.S. 2yr\/10yr yield curve remains inverted. Housing (interest rate sensitive) is weakening. The labor market is showing some signs of cracks (i.e., weekly jobless claims trending up).\u00a0<\/span><\/p>\n

        But we don\u2019t want to mistake a slowdown to +50bp or +25bp hikes for a full Fed pivot (i.e., rate cuts). Anchoring inflation expectations remains a process, which is not yet (near) complete. Peak inflation remains different from mission accomplished. There\u2019s evidence demand is slowing but until supply catches up, restraint is what is necessary to bring inflation under control \u2013 tight policy must persist.<\/span><\/p>\n

        .<\/span><\/p>\n

        \u00a0<\/span><\/p>\n

        Disclosures<\/b><\/h5>\n

         <\/p>\n

        Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward looking statements cannot be guaranteed.<\/span><\/i><\/p>\n

        This commentary offers generalized research, not personalized investment advice. It is for informational purposes only and does not constitute a complete description of our investment services or performance. Nothing in this commentary should be interpreted to state or imply that past results are an indication of future investment returns. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with an investment & tax professional before implementing any investment strategy. Investing involves risk. Principal loss is possible.<\/span><\/i><\/p>\n

        Advisory services are offered through Aptus Capital Advisors, LLC, a Registered Investment Adviser registered with the Securities and Exchange Commission. Registration does not imply a certain level or skill or training. More information about the advisor, its investment strategies and objectives, is included in the firm\u2019s Form ADV Part 2, which can be obtained, at no charge, by calling (251) 517-7198. Aptus Capital Advisors, LLC is headquartered in Fairhope, Alabama. ACA-2208-23.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

        The Fed\u2019s annual Jackson Hole Economic Policy Symposium takes place on Friday and will open with a speech by Chair Powell at 10am EST. We expect Powell to reiterate that the FOMC remains committed to bringing inflation down and that upcoming policy decisions will depend on incoming data. He will likely pair this with verbiage […]<\/p>\n","protected":false},"author":14,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","content-type":"","inline_featured_image":false,"footnotes":""},"categories":[20,128],"tags":[72,57,83,268],"class_list":["post-232221","post","type-post","status-publish","format-standard","hentry","category-blog","category-bonds","tag-chairman-powell","tag-fed","tag-inflation","tag-jackson-hole"],"yoast_head":"\nWhat to Expect From Jackson Hole - Aptus Capital Advisors<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What to Expect From Jackson Hole - Aptus Capital Advisors\" \/>\n<meta property=\"og:description\" content=\"The Fed\u2019s annual Jackson Hole Economic Policy Symposium takes place on Friday and will open with a speech by Chair Powell at 10am EST. We expect Powell to reiterate that the FOMC remains committed to bringing inflation down and that upcoming policy decisions will depend on incoming data. He will likely pair this with verbiage […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/\" \/>\n<meta property=\"og:site_name\" content=\"Aptus Capital Advisors\" \/>\n<meta property=\"article:published_time\" content=\"2022-08-24T15:09:10+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-11-28T22:39:22+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2022\/08\/Terminal-fed-funds-rate_Bianco-8.16.22.png\" \/>\n<meta name=\"author\" content=\"John Luke Tyner\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"John Luke Tyner\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/\"},\"author\":{\"name\":\"John Luke Tyner\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#\/schema\/person\/1cb0ec6f779811837ff41a8fafdaeed3\"},\"headline\":\"What to Expect From Jackson Hole\",\"datePublished\":\"2022-08-24T15:09:10+00:00\",\"dateModified\":\"2022-11-28T22:39:22+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/\"},\"wordCount\":1163,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#organization\"},\"keywords\":[\"Chairman Powell\",\"Fed\",\"inflation\",\"Jackson Hole\"],\"articleSection\":[\"Blog\",\"Bonds\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/\",\"url\":\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/\",\"name\":\"What to Expect From Jackson Hole - Aptus Capital Advisors\",\"isPartOf\":{\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#website\"},\"datePublished\":\"2022-08-24T15:09:10+00:00\",\"dateModified\":\"2022-11-28T22:39:22+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/aptuscapitaladvisors.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"What to Expect From Jackson Hole\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#website\",\"url\":\"https:\/\/aptuscapitaladvisors.com\/\",\"name\":\"Aptus Capital Advisors\",\"description\":\"Portfolio Management for Wealth Managers\",\"publisher\":{\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/aptuscapitaladvisors.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#organization\",\"name\":\"Aptus Capital Advisors\",\"url\":\"https:\/\/aptuscapitaladvisors.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2019\/12\/logo@2x-1.png\",\"contentUrl\":\"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2019\/12\/logo@2x-1.png\",\"width\":674,\"height\":200,\"caption\":\"Aptus Capital Advisors\"},\"image\":{\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#\/schema\/person\/1cb0ec6f779811837ff41a8fafdaeed3\",\"name\":\"John Luke Tyner\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/28e487f9380cd8bcf2d391fb71bf652f?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/28e487f9380cd8bcf2d391fb71bf652f?s=96&d=mm&r=g\",\"caption\":\"John Luke Tyner\"},\"url\":\"https:\/\/aptuscapitaladvisors.com\/author\/acajohnluke\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What to Expect From Jackson Hole - Aptus Capital Advisors","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/","og_locale":"en_US","og_type":"article","og_title":"What to Expect From Jackson Hole - Aptus Capital Advisors","og_description":"The Fed\u2019s annual Jackson Hole Economic Policy Symposium takes place on Friday and will open with a speech by Chair Powell at 10am EST. We expect Powell to reiterate that the FOMC remains committed to bringing inflation down and that upcoming policy decisions will depend on incoming data. He will likely pair this with verbiage […]","og_url":"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/","og_site_name":"Aptus Capital Advisors","article_published_time":"2022-08-24T15:09:10+00:00","article_modified_time":"2022-11-28T22:39:22+00:00","og_image":[{"url":"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2022\/08\/Terminal-fed-funds-rate_Bianco-8.16.22.png"}],"author":"John Luke Tyner","twitter_card":"summary_large_image","twitter_misc":{"Written by":"John Luke Tyner","Est. reading time":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/#article","isPartOf":{"@id":"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/"},"author":{"name":"John Luke Tyner","@id":"https:\/\/aptuscapitaladvisors.com\/#\/schema\/person\/1cb0ec6f779811837ff41a8fafdaeed3"},"headline":"What to Expect From Jackson Hole","datePublished":"2022-08-24T15:09:10+00:00","dateModified":"2022-11-28T22:39:22+00:00","mainEntityOfPage":{"@id":"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/"},"wordCount":1163,"commentCount":0,"publisher":{"@id":"https:\/\/aptuscapitaladvisors.com\/#organization"},"keywords":["Chairman Powell","Fed","inflation","Jackson Hole"],"articleSection":["Blog","Bonds"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/","url":"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/","name":"What to Expect From Jackson Hole - Aptus Capital Advisors","isPartOf":{"@id":"https:\/\/aptuscapitaladvisors.com\/#website"},"datePublished":"2022-08-24T15:09:10+00:00","dateModified":"2022-11-28T22:39:22+00:00","breadcrumb":{"@id":"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/aptuscapitaladvisors.com\/what-to-expect-from-jackson-hole\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/aptuscapitaladvisors.com\/"},{"@type":"ListItem","position":2,"name":"What to Expect From Jackson Hole"}]},{"@type":"WebSite","@id":"https:\/\/aptuscapitaladvisors.com\/#website","url":"https:\/\/aptuscapitaladvisors.com\/","name":"Aptus Capital Advisors","description":"Portfolio Management for Wealth Managers","publisher":{"@id":"https:\/\/aptuscapitaladvisors.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/aptuscapitaladvisors.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/aptuscapitaladvisors.com\/#organization","name":"Aptus Capital Advisors","url":"https:\/\/aptuscapitaladvisors.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/aptuscapitaladvisors.com\/#\/schema\/logo\/image\/","url":"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2019\/12\/logo@2x-1.png","contentUrl":"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2019\/12\/logo@2x-1.png","width":674,"height":200,"caption":"Aptus Capital Advisors"},"image":{"@id":"https:\/\/aptuscapitaladvisors.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/aptuscapitaladvisors.com\/#\/schema\/person\/1cb0ec6f779811837ff41a8fafdaeed3","name":"John Luke Tyner","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/aptuscapitaladvisors.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/28e487f9380cd8bcf2d391fb71bf652f?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/28e487f9380cd8bcf2d391fb71bf652f?s=96&d=mm&r=g","caption":"John Luke Tyner"},"url":"https:\/\/aptuscapitaladvisors.com\/author\/acajohnluke\/"}]}},"_links":{"self":[{"href":"https:\/\/aptuscapitaladvisors.com\/wp-json\/wp\/v2\/posts\/232221","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/aptuscapitaladvisors.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/aptuscapitaladvisors.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/aptuscapitaladvisors.com\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/aptuscapitaladvisors.com\/wp-json\/wp\/v2\/comments?post=232221"}],"version-history":[{"count":0,"href":"https:\/\/aptuscapitaladvisors.com\/wp-json\/wp\/v2\/posts\/232221\/revisions"}],"wp:attachment":[{"href":"https:\/\/aptuscapitaladvisors.com\/wp-json\/wp\/v2\/media?parent=232221"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/aptuscapitaladvisors.com\/wp-json\/wp\/v2\/categories?post=232221"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/aptuscapitaladvisors.com\/wp-json\/wp\/v2\/tags?post=232221"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}