Do Stocks Even Care About the Fed's Jackson Hole Meeting?
Aug 22, 2023
August is usually a sleepy month on Wall Street. Historically, it's the time when most traders take a vacation. It's also second worst to September in terms of average return going back to 1980. But it's not all bad. There have been some good times. For example, in August 2020, the S&P 500 popped 7.3% in a pandemic rebound. That was a fun one.
However, there have been some ugly Augusts: 1990 (-9.4%), 1998 (-14.6%), 2001 (-6.4%), 2015 (-6.3%) and 2022 (-4.2%).
So far in August 2023, the S&P 500 is down 3.9%, and looking more like one of the not-so-pretty times. There hasn't been much to get excited about this month. Second-quarter earnings reports are mostly finished, with a few retail and tech stragglers still left to announce results. Volume has been mostly light—which is the perfect environment for higher volatility.
Now, with nothing else to look forward to, all eyes will be on Jackson Hole, Wyoming, as the Federal Reserve debates changes to policy at its annual retreat.
Traders remain unsure whether the central bank can guide the economy to a soft landing or if they will accidentally usher in a recession between now and the end of 2024. Treasury yields are trading at their highest levels in fifteen years. Additionally, the Federal Open Market Committee (FOMC) meeting minutes last week showed that most Fed officials were in favor of further rate hikes. They still feel that inflation is a risk.
It is for these reasons that most expect Fed chair Jerome Powell to echo his message from the July meeting. You know, the one where he says, "Inflation is too high and the Fed remains committed ...", yada, yada, yada.
Everyone knows the Fed is still attempting to bring inflation down to its 2% target. However, there are lots of questions. Are they content with the recent string of cooler inflation reports? Did the slight jump in the July CPI report bother them? Will they keep attacking inflation with one or two more rate hikes? Or will the institute an extended pause?
Either way, don't expect rates to go down anytime soon.
Jermal Chandler, tastylive head of options strategy, has been in the market and trading for 20 years. He hosts Engineering the Trade, airing Monday, Tuesday, Thursday and Friday. @jermalchandler
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.