Medicare Agent News: All Eyes On (Virtual) Jackson Hole

Monday, August 30, 2021

All Eyes On (Virtual) Jackson Hole

By Nicholas Jasinski | Thursday, August 26

Anticipation. Stock indexes opened around break-even today, before slowly but steadily declining through the day. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all closed down about 0.6%, each a hair below their record highs.

That might have been some selling ahead of the Federal Reserve's Jackson Hole Economic Policy Symposium, which continued to be the main talking point on Wall Street. Stocks have rallied over the past week, as the general consensus has moved toward expecting an overall dovish tone from officials at the conference, which is being held virtually this year. Few seem to expect a tapering announcement tomorrow.

And if that's the consensus that has been priced into stock indexes over the past week of gains, then the risk of tomorrow's Fedspeak appears to be more to the downside if Fed Chairman Jerome Powell or other speakers take a more hawkish tone—or unexpectedly do make a tapering announcement. Hence today's declines ahead of the meeting.

Here's Barron's Lisa Beilfuss:

Market strategists and economists across Wall Street expect some discussion around an eventual reduction in the emergency bond-buying program the Fed launched in response to the pandemic. Recently, however, expectations have shifted. Hardly anyone expects Powell to outline a fall start to tapering the $120 billion in monthly Treasury and mortgage-backed securities purchases, and some who have been expecting a November announcement think 2022 is becoming more likely.

Peter Duffy, chief investment officer at Penn Capital, is looking for a loose, noncommittal plan, and he thinks Powell may suggest a slower wind-down than investors expect—meaning reductions might not be on monthly autopilot as in the last bond-buying wind-down.

There are two main reasons some observers don’t expect to hear firm taper plans this week. First, there is the Delta-variant wildcard. Second, Powell will be reluctant to front-run the policy-making committee, which next meets Sept. 21-22.

So barring a surprise from Powell—who speaks at 10 a.m. Eastern time tomorrow—investors can look forward to another month of tapering debates and speculation.

Fiscal policy is set to become a larger topic of conversation in the coming weeks as well. The Senate has already passed a bipartisan infrastructure package, with the House of Representatives scheduled to vote on the measure in September. Congressional Democrats, meanwhile, will be hard at work on a larger reconciliation bill, which aims to add more spending on climate and social priorities.

Investors are still likely to consider peak stimulus in the rearview mirror. The Fed is about to take its foot off the gas, and the short-term stimulative impact of a multiyear infrastructure package won't come near the boost that multiple rounds of direct checks to American consumers have had. The timing is the only point of uncertainty there.

Read more from Lisa's Jackson Hole preview here.