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A Choppy Week Ahead of Good News from Chairman Powell: Market Commentary from Cabana’s CEO – August 26, 2024

3 months ago

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We have seen some choppy markets over the past week as both stocks and bonds tried to find equilibrium after the big rally since the August 5 bottom, and ahead of Fed Chairman Powell’s speech on Friday. The Federal Reserve meets each year in Jackson Hole, Wyoming for its annual retreat. Investors have been waiting for confirmation that a rate cut is on the way. We have had solid data recently showing that inflation is on track to hit the Fed’s 2% target. This, coupled with softening of the job market has the bond market pricing in the near certainty that a rate cut is on deck for September – but we still want to hear it from the man himself. 

Chairman Powell gave us what we wanted and confirmed it is now time to “change policy”. He didn’t say when or by how much, but you really can’t expect him to. He said what needed to be said and that is enough for me – and it seems everyone else. Stocks rallied and bond yields dropped. The next talking point will be whether the first cut is 25 basis points or 50. The job reports over the next few weeks will likely have the answer. If jobs hold up, I expect a 25 basis point cut. If jobs weaken further, a 50 basis point cut is possible.  

In any event, this is good news. As I stated two weeks ago, history says risk assets do well at the end of a hiking cycle (and we just had a doozy of a hiking cycle). All this presumes we don’t get a recession. That is why the jobs data is so important. 

At Cabana, we remain bullish and are allocated accordingly. 

Disclaimers

January 17, 2024

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material may only be distributed in its original format and may not be altered or reproduced without the prior written consent of Cabana. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.  

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All indices and categories are unmanaged and an individual cannot invest directly in an index or category. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/. 

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The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq