weekly market update

“As is often the case, we are navigating by the stars under cloudy skies….we will proceed carefully as we decide whether to tighten further, or instead, to hold the policy rate constant and await further data.”

~  Federal Reserve Chairman Jerome Powell during Friday, August 25th Jackson Hole speech ~

Markets expected a balanced message from Jerome Powell and he delivered, as the Fed Chair sought to thread the needle between both hawkish and dovish points while emphasizing data dependence.  On the hawkish side, Mr. Powell highlighted GDP growth above long-run trends coupled with signs of the housing market “picking back up” as risks that might warrant future rate hikes.  However, on the dovish side, he stressed the potential for “significant further drag” by highlighting the lags with which tighter monetary policy impacts economic activity.

Recently, some market participants and politicians have suggested the Fed raise its 2% inflation target, but Powell explicitly rejected that notion.  Ultimately, the much-anticipated speech was fairly well received as interest rates barely moved and stocks rallied, as investors breathed a sigh of relief.  Fed announcements usually take a few days for markets to properly digest and next week is chock full of important economic data releases, including JOLTS (job openings and labor turnover survey), consumer confidence, personal consumption expenditures (PCE), and perhaps most notably, Friday’s jobs report for August.

CHEAP CARS ARE OFFICIALLY EXTINCT

During Jerome Powell’s speech, he highlighted declining motor vehicle inflation, but we wanted to use this as a segue to quickly note the end of new cars available for below $20,000.  Entering August, only 1 model in the US transacted below $20,000 – the Mitsubishi Mirage.  However, about two weeks ago, Automotive News reported that Mitsubishi will discontinue the Mirage in the US...

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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