What To Expect From Jerome Powell At Jackson Hole
38 year market veteran Kenny Polcari says "get ready for more vagueness" ahead of Friday morning's comments from the Fed Chair.
Friend of Fringe Finance and well known financial news contributor - as well as 38 year veteran of markets - Kenny Polcari has been kind enough to share his most recent thoughts on the market with our readers.
I’ve been lucky enough to be friendly with Kenny for about a decade now, and he was the first guy to ever take me on what I can only describe as an unauthorized tour of the NYSE trading floor, where I got to personally tell several confused specialists and market makers that the Chinese names they were trading were frauds that didn’t even exist.
The tour didn’t last as long as I would have liked, to say the least. But I’ve always appreciated Kenny’s willingness to welcome people into his busy world for nothing in exchange, and his decades of experience, which gives you a pulse on markets that only time can help you recognize.
For those who aren’t familiar with Kenny or don’t recognize him from TV, he is Managing Partner of Kace Capital Advisors, Chief Market Strategist at SlateStone Wealth, and a Managing Director at Campfire Capital a boutique investment bank. He started his career on the floor of the New York Stock Exchange (NYSE) as an institutional broker back in the early eighties when the march of electronic trading was already taking its first steps, and the great bull was first learning to run.
I’m happy to offer up Kenny’s latest thoughts on yesterday’s trading and going forward in macro, from this morning.
The post has been lightly edited for punctuation and grammar.
Kenny On This Week’s Macro Data
Economic data this week revealed a weakening economy.
US Services PMI plunged to 44.1, putting it well into contractionary territory. US Manufacturing PMI also fell, but not nearly as much, leaving it at 51.3 – barely in expansionary mode, but it too is trending lower which isn’t a good sign. And then we got New Home Sales (and remember what I said earlier in the week, the expectation was for sales to fall 2.5%) but the whisper number was weaker - and weaker is what we got: New Home Sales fell a whopping 12.6%!
We now have housing (new, existing and pending) trending lower, we have mortgage demand at the lows of 2001, we have first mortgage lenders filing for bankruptcy and we have credit card debt up 30% in 3 months.
We have inflation running at 8.5% y/y, we just got not 1 but 2 massive spending bills out of DC, we got [President Biden] cancelling $10,000 of student debt for anyone making up to $125,000 a year (following through on one of his campaign promises) and you can be sure that the progressive left is not happy: they want more and those borrowers who took huge advantage and borrowed 10x that amount are not happy with an only $10,000 cancellation.
Chuck Schumer has been urging Biden to cancel “as much as possible”, suggesting that $10,000 was “chump change”.
All the while, natural gas is hitting 14 year highs as demand for the fossil fuel soars in Europe and now we also have the Saudis and OPEC saying they need to defend the price of oil, suggesting production cuts to control supply/demand are on their way. That sent up oil this week on Tuesday.
Oh to be a fly on the wall in the White House!
Kenny on Trading Jackson Hole
Oh, and I forgot to mention: we have the Fed and Jerome Powell raising rates into all of this, which continued to send stocks lower to start the week (albeit at a slower pace than we saw last Friday).