This Week’s Focus: Federal Reserve’s Jackson Hole Symposium
All eyes are on the Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming, set to begin on Friday. Investors are eagerly anticipating insights into the Fed’s strategy regarding interest rate cuts in the coming months. Recent optimism over a “soft landing” for the U.S. economy has sparked a positive shift in market sentiment, easing recession fears.
The symposium’s key highlight will be Fed Chair Jerome Powell’s speech. Market participants are largely pricing in a dovish stance, especially following comments from Fed members Mary Daly and Austan Goolsbee, who suggested that easing might be on the horizon as soon as September. The central bank has held its benchmark interest rate steady at 5.25%-5.50% since July after a series of rate hikes totaling 525 basis points since 2022.
With markets riding high on expectations, this week’s event could provide further clarity on whether a quarter-point or half-point rate cut will be the Fed’s next move.
Markets Take a Breather After a Winning Week
After recording their best week of the year, U.S. stock futures saw modest declines on Monday. The S&P 500 surged 3.9%, marking its best week since 2023, while the Nasdaq Composite rose 5.2%, and the Dow Jones Industrial Average climbed 2.9%.
Investors are shifting their focus this week to the minutes from the Federal Reserve’s latest meeting, due Wednesday, and Powell’s upcoming Jackson Hole speech on Friday. In addition, earnings reports from Palo Alto Networks and Estee Lauder are on the horizon, keeping the markets on their toes.
Democratic National Convention Kicks Off
This week also marks the start of the four-day Democratic National Convention, with Vice President Kamala Harris set to accept the party’s presidential nomination. Harris enters the convention with renewed momentum, as polls indicate growing support, particularly in key battleground states.
UBS reports that recent polls show Harris gaining over six points nationally and improving on President Biden’s position in critical swing states. With an upcoming debate against Republican candidate Donald Trump next month, the convention offers Harris a prime opportunity to define her policies and win over undecided voters.
Goldman Sachs Lowers Recession Odds
Goldman Sachs has revised its recession forecast, lowering the odds of a U.S. recession in the next 12 months to 20%, down from the previous estimate of 25%. Strong economic data from July and early August, including a drop in jobless claims and a surge in retail sales, has eased concerns of a downturn.
Goldman’s chief U.S. economist, Jan Hatzius, said that if the August jobs report is “reasonably good,” the recession probability could be further reduced to 15%. Hatzius also maintains that the Fed will likely cut interest rates by 25 basis points in September, though a larger cut could be on the table if the jobs data disappoints.
Crude Prices Dip Amid Middle East Ceasefire Talks
Oil prices slipped on Monday, with U.S. crude futures (WTI) falling 0.9% to $74.83 a barrel and Brent crude dropping 0.9% to $78.98 a barrel. The drop follows weaker-than-expected economic data from China and ongoing ceasefire talks in Gaza.
As discussions continue in Cairo this week, U.S. Secretary of State Antony Blinken emphasized the urgency of securing a ceasefire, citing it as potentially the “last opportunity” for peace in the region. With fears of an escalation in conflict, the situation remains tense, with potential implications for oil supply from the Middle East.
This week will be critical for monitoring both geopolitical developments and their impact on the energy market.
PYT tickers
PYPL-
ER is 10/29
Overall Bullish
Resistance is $70, Support is $67.70
Only Stochastic is bearish- rest are bullish
SMCI-
ER is 11/5
Overall Bearish
Resistance is $654, Support is $598
Only MACD is bullish- rest are bearish
F-
ER is 10/23
Overall is Bearish
Resistance is $10.56, Support is $10.31
Only MACD is bullish- rest are bearish
CVX-
ER is 11/1
Overall Bearish
Resistance is $141.27, Support is $145.65
Only Stochastic is bullish- rest are bearish
SPY/SPX- Last week we said “the main watch will be how price trades versus the 5385 level, representing last week’s high. Buyers will be looking to to show strength above this level. If successful, price would target 5435, 5485 and 5515.” The focus was on the prior week’s hammer, which is typically an indication that the following bar will be bullish. That is exactly what we saw with last week. Price now approaches another critical juncture.
For this week, the main focus will be how price trades versus the recent daily pivot at 5600, which loosely aligns with last week’s high. If last week’s buying activity continues, price will target 5630, 5650, and the all-time high near 5720. If sellers are successful in defending the 5600 daily pivot, price will target 5525, 5485, and potentially 5455.
Given that price has shown 7 consecutive days higher, I would not be surprised to see weakness or consolidation early in the week.
At a glance:
Upside levels of interest: 5600, 5630, 5650, 5720
Downside levels of interest: 5525, 5485, 5455
Notable Economic Data
Friday: Powell Speech
Wednesday: FOMC Minutes
Thursday: Jobless Claims
See you all in chat
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