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Unpacking Powell鈥檚 remarks at Jackson Hole: When will the Fed announce a decision on tapering? - YouTube
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welcome to market week in review for the
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week ending august 27th 2021. i'm sophie
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antoshiber and i'm joined today by our
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chief investment strategist paul
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eidelman hello paul hi sophie good
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morning
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good morning it's great to see you
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and
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i'm very excited to talk to you because
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we're going to get some intel from you
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hot off the press what some of the news
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was out of the conference the jackson
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hole symposium this morning where jay
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powell spoke um obviously head of the
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federal reserve board jay powell um can
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you give us some insights into what did
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he share how are markets reacting um any
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any additional impressions that you had
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maybe starting with what did he actually
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say what did you take away from his main
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message
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yeah so i think this was an eagerly
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anticipated speech here on on friday
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morning what pal basically did was to
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walk through his economic outlook but he
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also sprinkled in
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his personal views on when it would be
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appropriate to start
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tapering asset purchases and i think
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that was really the focus for
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investors this week
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and to put the cart before the horse a
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little bit it seems like
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powell agrees with the majority of the
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fomc and thinking that it is going to be
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appropriate for them to start reducing
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the pace of asset purchases or sort of
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quote taper
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this year
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and
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to kind of translate that into
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something that's a little bit more
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meaningful there's
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three
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fomc meetings
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still scheduled for the rest of this
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year there's one in september
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one in november and one in december
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and
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uh we think that kind of translates to a
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november announcement december seems a
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little bit too late to make an
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announcement of the tapering decision
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because it always takes the federal
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reserve bank of new york some time to
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implement those decisions in how they
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actually trade securities
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september also seems a little bit too
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soon for an announcement because
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powell did hedge some of his comments
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noting that the delta variant has really
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picked up a little bit so
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really the guidance from powell's speech
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today narrows in
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that the timing of uh tapering pretty
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squarely on that november fomc meeting
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and that's right around the same time
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that we had been
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forecasting and expecting so it hasn't
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really moved the needle that much for
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our own
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personal views uh but it really has
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helped to crystallize and provide more
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guidance in that direction that's
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helpful
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so it sounds like you were maybe not
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entirely surprised by some of this
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guidance and the timing um how are
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markets reacting especially bearing in
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mind that you know back in 2013 when we
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had you know taper talk suddenly it
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became the taper tantrum markets didn't
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react very well
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right now it seems like they're pretty
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calm is that am i reading that right or
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is there is there more to the story
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there yeah i think markets this morning
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are calm if not outright strong and um
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when you kind of look at global equity
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markets the msci all country world index
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is trading up
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about 70 basis points this morning which
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is a pretty good result
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uh in the us we're trading up about 60
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basis points so
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some pretty good strength globally
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um and interest rate markets are fairly
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calm as well
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uh with the 10-year treasury yield flat
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if not even down a little bit this
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morning so we're not really seeing that
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same kind of
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stress and surprise
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and
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revolt if you will that kind of followed
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ben bernanke's famous taper tantrum
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speech back in the summer of 2013. i
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think there's probably
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three reasons for that number one that
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the fed is
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moving towards this decision for good
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reasons because we've had such an
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impressive
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recovery in the economy and as we've
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talked about a lot on
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on these videos corporate earnings have
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been exceptionally strong so
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a lot of the decision is because of the
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good news that we've had over the last
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18 months or so i think second this has
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been
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really well telegraphed so unlike um
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bernanke's speech back in 2013 which was
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a total surprise the the fed has been
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taking sort of
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uh baby steps towards this decision over
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the last several months and almost every
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economist that
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i talked to or
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read reports from
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has
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a view of this announcement towards the
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end of this year already so it just
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really wasn't a particular surprise
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and maybe the final point which was the
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the other feature of powell's speech
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today is he tried to separate
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this taper decision from
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the decision to raise interest rates and
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really emphasize that that decision to
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raise interest rates is probably still
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some time off that they have a lot of
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ground to cover particularly on the
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labor market before liftoff will be
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appropriate and i think that also helped
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to to soothe uh equity markets a bit so
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certainly so far so good nowhere near
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the dramatic reactions that we saw
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during the taper tantrum back in 2013
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markets are
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calm if not pretty strong this morning
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that's really helpful to know and and
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great to be able to hear so quickly
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after after the speech what your key
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takeaways were from it if i can ask you
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one more question paul it would be to
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look out to next week are there any
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things on the horizon next week that
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you're particularly watching that we as
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investors should be tuning into as well
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well next week we start to transition
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into the month of september so we'll
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start to
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get more data on
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how the strength of the us and global
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economy is performing in august
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uh a big focus on non-farm payrolls
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always um and sort of tying into fed
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strategy are we continuing to see really
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robust job gains and i think our sense
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is
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the us economy and the global economy is
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powering through this
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delta variant and demonstrating some
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pretty good resilience so we're looking
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for some healthy numbers
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continuing next week but that'll be the
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big focus is the economic recovery
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continuing and we think it is
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excellent well we will look forward to
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next week's market we can review edition
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on friday to get an update on those
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non-farm payroll numbers thank you so
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much paul unfortunately that's all we
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have time for today but thank you so
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much for sharing your insights with us
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paul yep happy too
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and thank you for joining us we'll see
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you again soon
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hi i'm eric ristoben chief investment
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strategist for russell investments if
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