The Federal Reserve Bank of Kansas City’s 2024 Jackson Hole Economic Symposium starts Thursday in Wyoming. Investors will be closely watching Fed Chair Jerome Powell’s speech from the event on Friday, given that markets are anticipating a potential interest rate cut in September. BCA Research chief strategist for US equity strategy Irene Tunkel joins Morning Brief to discuss how this event could influence market movements.
Tunkel suggests that markets are "entering a period of volatility" due to three main factors: economic data remains "very mixed," the Fed is poised to begin an easing cycle of an unclear magnitude, and it’s an election year.
"It appears to me that the market is very positive, it’s priced for perfection, perhaps the macroeconomic backdrop is fine, but let’s think there are so many things that are coming up and stocks are expensive," she tells Yahoo Finance. Tunkel adds, "it’s very hard to see the market making new sustainable highs."
Regarding the rate-cutting cycle and its potential market impact, Tunkel states it’s "more or less priced in." While uncertainty exists around the extent of Fed cuts, markets are confident they will occur. Consequently, a cut might not significantly boost markets. "So here, again, you could have some negative surprises if the Fed comes across a little bit more cautious," Tunkel explains, but she believes a cut will be a "buy the rumor, sell the news" event.
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