I have been seeing many posts concerning the inventory market response to the final two Powell’s speeches on the Jackson Gap Symposium.
Whereas it is true that the market did not carry out properly within the following couple of months, the context right this moment is far totally different.
In 2022, it goes with out saying why it was totally different. The Fed was nonetheless in the course of its climbing cycle and Powell delivered a really hawkish message.
In 2023, it wasn’t truly the Jackson Gap occasion that triggered the weak spot. It was first the new CPI on Thursday 14th after which the far more hawkish than anticipated FOMC on Wednesday twentieth.
Even with out these two catalysts in 2023, the market diverged fairly strongly from actual yields and ultimately it simply caught as much as the fact earlier than bottoming out and resuming the rally into the December’s Fed pivot.
Proper now, we are literally coming into the easing cycle with resilient progress which is a powerful tailwind for shares as that ought to depress actual yields and increase financial exercise.
So, whereas we won’t know for positive how the market’s going to carry out within the subsequent couple of months, I might say that this time a rally is extra probably.