If you hopped on a flight and headed to the Goldman Sachs Headquarters at 200 West Street in New York City, you might get quite a surprise when you entered the building…
It would be nearly impossible to find anyone under the age of 40.
That’s not a bad thing by any means, but it does reflect the changing demographic of investors nowadays.
Folks younger and younger are getting into the markets, and this new wave of young investors simply have not seen inflation, trading conditions, or interest rates like this before.
It’s a whole new ball game to them.
And whether you’re 28 or 58, whether this year has thrown you for a loop or hasn’t scared you much, we want to talk to you about why the Fed’s Symposium this week is critical…
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A Market-Moving Event
The Fed is responsible for managing U.S. monetary policy, regulating bank holding companies and other member banks, and monitoring systemic risk in the financial system. (That’s the literal definition from the Council on Foreign Relations.)
Every year in August, they hold the Jackson Hole Economic Policy Symposium, and while this isn’t a technical Fed “meeting,” this event often moves the market in extreme ways.
During the financial crisis (2007-2012), the chairman of the Federal Reserve at the time, Ben Bernanke, gave speeches at Jackson Hole that were specific about how the Fed planned to intervene in the market. For example, the so-called “QE-2” (quantitative easing) was hinted at in 2010, and “operation twist” was the focus in 2012.
Mysterious names aside, big things usually happen after these symposium speeches.
According to Barron’s…
The first day of the Jackson Hole meeting usually kick-starts strong stock market performance in the near-term, historically speaking. The average move for the Dow Jones Industrial Average for the month following the first day of the meeting is up 0.3%, in data dating back to 1978, according to Dow Jones Market data. The S&P 500 averages a 0.5% gain, while the more volatile Nasdaq Composite averages a 0.9% rise.
This year, investors seem to be pricing in the potential for a more hawkish stance (hawkish refers to a more aggressive approach to the threat of inflation) from the Fed during the symposium.
If Jerome Powell and the other Fed governors indicate that interest-rate hikes will continue at their current pace until inflation is under control, we will likely see a negative reaction in the market.
And the negative momentum in the market this week is evidence that traders are already pricing in some hawkish comments from the Fed.
The level of uncertainty is high, which is frustrating. However, the good news is that the issues we are watching are transient; everyone already knows that the Fed is going to keep raising rates. Expectations about how much and how fast rates will change has increased this week, but they are likely to ebb again next month.
It’s imperative now more than ever to exercise caution, but that doesn’t mean that you should pull out of the market – far from it, actually.
Because with a method that we’ve perfected over the years, you can have the chance to reap as much as $2,470 in a single day – no matter which move the Fed pulls or how much the market swings up or down.
John and Wade