Five Ways to Poke The Bear
LPL Research strategists Ryan Detrick and Lawrence Gillum analyze the recent Jackson Hole Symposium while also poking holes in five common bearish themes.
Jackson Hole Review
At the Annual Jackson Hole Economic Symposium, Federal Reserve (Fed) Chair Jerome Powell calmed any fears over higher rates anytime soon. As Lawrence notes, Powell made it clear that tapering could be coming, but that doesn’t mean higher rates are also coming. It was widely expected that a year after tapering started we’d see the first rate hike—but Powell put cold water all over that—and it could be much longer. As a result, stocks soared. Ryan explains how the punch bowl isn’t leaving yet.
Poking Some Bear Arguments
Ryan begins by pointing out that when stocks are up a lot (more than 15% for the year) at the end of August, the final four months actually do better than average. Lawrence adds that earnings have been extremely strong, and it isn’t just because of easy year-over-year comps. We’re not seeing a taper tantrum like 2013, as the Federal Reserve Bank has telegraphed things much better this time around. Ryan chimes in that many think cyclicals are dead, but we disagree and expect this group to begin taking the baton back. It might have started already after a huge move from small caps last week. Ryan and Lawrence wrap up the conversation with some Washington talk and why policy won’t derail things.
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All index data is from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This Research material was prepared by LPL Financial, LLC.
For Public Use — Tracking #1-05185285 (08/22)