September Market Commentary: If the Fed Is Having a Goldilocks Moment, Is the Economy Baby Bear?

August Recap and September Outlook

After the bear market rally in July was extended for the first few weeks of August, Federal Reserve Chairman Powell used the Fed’s annual Jackson Hole symposium to clarify the Fed’s position on future rate increases.

Powell was clear that there would be no “Fed Pivot” until improvements in the inflation rate are sustained.

He acknowledged the costs of reducing inflation. Slower growth, higher interest rates for consumer loans, and a softer labor market are all part of the ongoing reality.

The Fed’s priority is to avoid entrenched consumer expectations of higher inflation, which partly caused the runaway inflation of the 1970s. The Fed needs to act decisively to bring inflation down quickly, which Powell described as a “forceful and rapid” approach to rate increases.

Continue reading