Good morning, traders,
Today at 10 a.m. ET, all eyes will be on a quiet patch of Wyoming where some of the most powerful people in finance gather once a year to throw their weight around in loafers and hiking boots.
Jackson Hole is where the tone for the rest of the year can be set in a single sentence. And right now, the stakes are sky-high.
For weeks, traders have been leaning into the idea of a 0.25% rate cut coming at the September FOMC meeting.
They’ve been pricing it in like it’s a done deal.
Inflation has cooled enough (not a lot, but enough), consumer demand is showing cracks, and the political drumbeat around economic softness is getting louder heading into an election year.
But then — cue the record scratch — Jeffrey Schmid, president of the Kansas City Fed, just tossed a wrench in that script.
He’s not buying the rate-cut narrative.
Schmid thinks inflation still hasn’t behaved the way it needs to before the Fed can justify easing.
That means Powell has a tightrope to walk today.
He has to keep the market calm without making promises the Fed might not want to keep.
If he signals that rate cuts are coming soon, markets will rally, plain and simple.
Stocks, especially tech and growth names, will get a fresh boost. Bond yields could drop and the dollar might soften.
It’ll look like the Fed is back in the market’s corner.
But if Powell holds the line, or worse — hints that the Fed isn’t confident enough to start cutting just yet — expect some real turbulence.
Here’s how’s to handle things regardless of what is — or isn’t — said today at Jackson Hole.
Turbulent Times
We’re in a weird spot.
The data isn’t screaming, “Cut now!” — but it’s not exactly screaming, “Stay tight,” either.
It’s murky.
Add to that the latest weekly jobless claims, which just came in at 235,000 — 10,000 higher than expected — and you start to see cracks forming under the economy’s surface.
And let’s not ignore Walmart.
When the biggest retailer in the country says tariffs are pressuring their margins and they miss earnings … that’s not just a one-off. That’s a signal.
The consumer is stretched. And corporate America knows it.
Now throw in a political mess.
Trump’s public accusations are heating up against Fed Governor Lisa Cook. He’s accusing her of mortgage fraud, and Cook is already firing back, saying she won’t be bullied.
That kind of drama right before a key Fed moment? Not helpful.
Will He or Won’t He?
All this creates one big question: What happens if Powell disappoints tomorrow?
The most likely reaction is a sharp move in equities.
The market is priced for cuts. If Powell doesn’t deliver at least a wink and a nod toward that path, volatility is going to spike.
Maybe not tomorrow, but within days. The VIX will respond. So will the dollar. So will risk assets.
That doesn’t mean everything crashes. But it does mean the easy-money crowd is going to get a cold splash of reality.
So, how do you trade this?
You get nimble. You stay tactical. Don’t bet the farm either way.
This is a classic “react, don’t predict” setup.
Personally, I’ll be watching the reaction to the speech even more than the speech itself.
Markets have a funny way of revealing the real story once the dust settles. And the biggest trades often come after the headline fades.
Tomorrow isn’t about Powell answering our questions.
It’s about how the market interprets the non-answers.
Stay street smart,
Jeff Zananiri
P.S. Today at noon ET, Danny Phee continues day three of our AI Mania series, a no-fluff walkthrough of the exact gameplan traders need right now.
We’ll cover where the real AI setups are, how to trade them with precision, and what to avoid so you don’t get caught chasing the hype.
*Past performance does not indicate future results
