When data pushes and pulls in opposite directions, like Dr. Doolittle’s fictional animal, traders should be prepared for anything. And prior Jackson Hole conferences have shown that Powell can be anywhere from even-handed to strident.
Interactive Brokers Traders Insight
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Like a pilot advising his passengers to keep their seat belts buckled in case of potential air pockets, over the past two days, it seemed advisable to buckle up for a potential pop in volatility. Consider VIX to be the price of parachutes when a plane hits turbulence.
Governor Christopher Waller’s reminder this morning that he’d prefer a rate cut this month coincides with the White House looking for Fed Chair Powell’s replacement. And investors are taking it well.
Investors are far less freaked out about tariffs than they were just three months ago, but they remain a sore subject. At the same time, most of us either know or have participated in, the roller-coaster ride of Tesla (TSLA) shares over the past several months.
Chair Powell has managed to stay on message about remaining cautious ahead of the potential effects of tariffs and resisted getting sucked into partisan politics. Since nothing he wrote or later said was particularly market-moving, equity traders could resume buying.
It is difficult to view political developments in an apolitical manner, but I’ve learned the hard way that one’s political opinions can all-too-easily cloud objective judgments about investing.
The increasingly confrontational developments related to cross-border commerce have pushed all major equity benchmarks and sectors into the red, as well as the greenback.
Stocks are climbing up again as this morning’s lighter-than-expected CPI print bolsters spirits following yesterday’s optimism sparked by tariff reprieves between Beijing and Washington.
April has been a struggle for the UK, with the country’s PMI Composite Index falling from 51.5 in the preceding month to 48.2. But even with dour consumer sentiment and a softening job market, UK growth could surprise to the upside.
The situation remains fluid, and volatility can work in either direction. But if you’re expecting the cavalry to ride in to save the markets from themselves, don’t.
If the tariff news is generally good, then it’s a reason for optimism. If the adjustments turn out to be less meaningful, that can be overlooked if it means that the administration is willing to offer periodic bullish tidbits to the market.
Traders are picking up the risk-off playbook in response to Washington implementing levies on products from Canada, China and Mexico.