The Fed is being “Real”ly Aggressive Trying to Catch-up

Stock markets moved sharply higher into mid-August on hope for a shift toward an easier Fed in the 4th quarter and in 2023. Real interest rates were falling into Chairmen Powell's speech in late August, having peaked on June 15th. The markets had interpreted Powell's July comments to signal the possibility of a downshift in the pace of rate hikes. Jerome Powell's 8-minute speech at Jackson Hole on Friday, August 26th threw cold water on that. Since then, virtually every asset market in the world has moved lower on a price basis. Stocks lower, Bond prices lower. Commodity prices? Lower. Click here for more info!

Turn on the financial news, and you’re bound to have heard the stories for at least 2 weeks already. The story that seasonally speaking, the month of September has been the worst month for stock returns historically speaking. Going back to 1928, the S&P500 is up only 45% of the time with a negative average return of about -1.1%. Midterm Presidential years, like we are in right now, show pretty much the same results, up less than 50% of the time with an average negative return of also -1.15% before getting into the historically seasonally stronger 4th quarter. Third quarters tend to go out on a down note and are not very promising at first glance. However, this short-term pain usually creates longer-term opportunities for investors.

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