The upcoming annual speech of the Federal Reserve Board Chairman at Jackson Hole has taken on a sort of “State of the Union address” quality for economists and market participants. Your Survival Guy will leave it up to others to judge the rationality or intelligence of endowing a single speech so much importance. But if the market will turn on the content of Powell’s speech—rationally or otherwise—investors should at least pay attention. Reuters‘ Howard Schneider reports:
Fed Chair Jerome Powell used the central bank’s annual Wyoming research conference to promise inflation-fighting rigor when it was needed in 2022, then last year he came to the defense of the job market with promises of lower interest rates when the unemployment rate seemed on a steady rise.
In his valedictory speech to the conference before his term ends next May, Powell on Friday faces a choice between the two approaches at a time when incoming information has confounded his data-dependent strategy by pulling in both directions. His colleagues are split whether higher inflation or higher unemployment is the bigger risk. Both investors and the Trump administration have strong expectations that rates will fall at the Fed’s September meeting regardless.
Whether or not the Fed cuts, investors should be considering the benefits of a balanced portfolio with bonds and stocks, and the value of reducing risk where and when possible. Your Survival Guy is not in the interest rate predictions business, and neither should you be. Look at the potential to reduce risk by increasing diversity displayed by Harry Markowitz’s efficient frontier below:
Action Line: When you want to talk about a balanced portfolio of stocks, bonds, precious metals, and more, email me at ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
