There’s a lot happening this week in the stock market. Big earnings, the S&P 500’s quarterly rebalance… And as I write this, Federal Reserve Chair Jerome Powell is addressing the press to discuss interest rates and monetary policy.
We need to know what’s going on between Powell’s speech and the stock market. It’s going to affect a lot of things, especially with inflation rising.
We’ve seen a breakdown in almost everything except for bond yields, and that pushes the market down — like we saw in the Nasdaq dip at the end of February.
On Tuesday, both the retail sales and industrial production reports came out… and they were dismal. Ahead of Powell’s speech, both inflation and bond yields are all climbing.
In our mind, the stock market is throwing a tantrum right now.
The U.S. economy is so intertwined with the stock market that when the market crashes, our economy usually follows suit. The Fed can’t allow that to happen, so the market is going to keep throwing these fits until it gets what it wants: manufactured low rates to sustain these super market returns.
Powell’s Speech and the Stock Market: What To Look For
WealthPress Senior Strategist Roger Scott sees the only alternative to manufacturing low rates is an economy that can keep the stock market bullish on its own.
A $1.9 trillion stimulus package that lets people buy food isn’t enough to get us there. We need people working and earning just as much, if not more than before just to keep up with inflation.
A key level we’re looking at is the 10-year Treasury yield. Right now, we’re at 1.67%…
If we get above 1.70%, we could see the wheels come off.
What we don’t like about Powell’s speeches and the stock market is how the Fed telegraphs everything it plans to do… Which is nothing for the next couple years.
But there’s a certain level that yields might hit before the Fed must take action…
Sit down with us as we talk about Powell’s speech and the stock market, real estate and how we want to trade the rest of the week.
As always, feel free to email your trading questions to jeff@joyofthetrade.com and make sure to stay ahead of the markets by subscribing to our YouTube channel.
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