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Powell’s Speech And Contracting ISM PMI

We want to zoom out and revisit the broader macroeconomic picture and analyze some of the latest data that came out this week, which will heavily influence the market direction over the next few months.

After Jerome Powell’s Brooking Institution speech, it’s clear that markets are chomping at the bit to move higher with any possible Federal Reserve narrative and pivot scenario. There’s over hedging, short squeezes, options market dynamics and forced buying. This is beyond our expertise to say exactly why markets are exploding with volatility on any given data point or new Powell speech. However, these types of events and market movements have nearly always been a sign of unhealthy and heightened volatile swings in bear markets. Despite more talk from Powell with nothing new really said, markets perceived the speech as more “dovish” with his commentary around the concern of overdoing rate hikes. Yet, if this is another bear market rally taking shape for the major indices, we seem to be close to that rally turning over yet again.

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