Every year in late August, an elite group of central bankers, economists, and policymakers gather in the picturesque setting of Jackson Hole, Wyoming, for an economic symposium hosted by the Federal Reserve Bank of Kansas City.

The event, known as the Jackson Hole Economic Symposium, is closely watched by investors. Nestled in the tourist haven of the Grand Tetons, attendees focus on global economic conditions, monetary policy and…fly fishing.

Over the decades, the pronouncements made by the U.S. Federal Reserve Chair at this symposium have moved the world’s financial markets, underscoring the power of “Fedspeak” over your money.

As I explain below, Fed Chair Jerome Powell’s remarks at Jackson Hole on Friday strongly bolstered the bull case.

This year’s Jackson Hole gathering, held August 22-24, carries particular weight because it occurs a month before the central bank’s Federal Open Market Committee (FOMC) is scheduled to meet.

It has become axiomatic that statements at Jackson Hole set the tone for future interest rate movements. Hints about tightening or loosening monetary policy influence bond yields, stock prices, and currency values.

That’s why you see all those CNBC reporters at Jackson Hole in stylish cowboy garb conducting interviews with snow-capped mountains in the distance. (I envy their expense accounts.)

During times of economic uncertainty, Jackson Hole chatter has either reassured or discouraged markets. This time around, Powell delivered enormous reassurance.

“The time has come for policy to adjust,” Powell said in his keynote speech Friday. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

The high priests who interpret the entrails at Jackson Hole were impressed that Powell said “cuts,” plural. His reference to multiple rate cuts suggested that a series of reductions is likely. An injection of liquidity on that magnitude is akin to adrenaline for equities.

Powell emphasized in his Friday morning speech that inflation seems mostly under control. “My confidence has grown,” he said, “that inflation is on a sustainable path back to 2%.”

In the wake of Powell’s dovish tack, global stocks generally rose. The main U.S. equity indices closed sharply higher Friday as follows:

• DJIA: +1.14%
• S&P 500: +1.15%
• NASDAQ: +1.47%
• Russell 2000: +3.19%

The benchmark 30-year U.S. Treasury yield fell 0.77% to settle at 4.10%. Small caps (as evidenced by the Russell 2000’s huge gain) and regional banks soared.

The following chart shows the projections of various experts regarding rate cuts. The consensus is that we’ll most likely get a cut at the FOMC’s next meeting, September 17-18:

Powell’s history at Jackson Hole…

Compared to his predecessors at the Fed, Powell is arguably the most talkative and transparent…sometimes, too much so. His voluble communication style certainly can’t be compared to the famously cryptic utterances of former Fed Chief Alan Greenspan. That said, Powell represents a shift toward greater transparency that started under another predecessor, Ben Bernanke.

In his 2019 Jackson Hole speech, Powell addressed the uncertainties posed by trade tensions, the global economic slowdown, and geopolitical risks. His remarks highlighted the Fed’s commitment to act appropriately to sustain the economic expansion, a message that calmed markets amid growing volatility. The S&P 500, which had been under pressure due to trade concerns, saw a relief rally following Powell’s comments.

During the COVID-19 pandemic in 2020, Powell’s virtual Jackson Hole speech introduced a significant shift in the Fed’s approach to inflation targeting. He announced a move towards “average inflation targeting,” allowing inflation to run above the traditional 2% target for some time to support economic recovery and maximize employment.

This policy change indicated that the Fed would keep interest rates lower for longer, leading to a surge in equity markets and a decline in bond yields.

In his 2021 Jackson Hole speech, Powell struck a neutral tone and explained why a new spike in inflation might wane on its own. Powell used his 2022 speech to pledge that officials would keep rates elevated until price increases were back under control, even if the economy suffered.

In his 2023 speech, Powell startled the commentariat by adopting a particularly hawkish stance, arguing that it would be premature to ease monetary policy because inflation still posed a threat. The equity markets sharply fell in response.

This time around, the economic backdrop is considerably more favorable. Inflation is down, the economy is resilient but decelerating, and second-quarter corporate earnings have been strong. What’s more, executives in Q2 earnings calls with analysts have been saying they’re optimistic, both about the economy and the prospects of their respective companies.

Read This Story: How to Beat Wall Street…Under All Investing Conditions

With the buoyant Democratic National Convention now over, the U.S. presidential election is in full swing. We’ll witness a brutal slugfest between Kamala Harris and Donald Trump leading up to the November election. But don’t be swayed by political drama.

I hear all kinds of specious advice offered by dubious advisors concerning the “Trump trade” or the “Kamala trade.” It’s all mostly nonsense.

Stay invested, stay diversified, and keep your eye on the long game.

PS: One advisor worth heeding is my colleague Jim Fink, chief investment strategist of Options for Income. Jim is the smartest options trader I know. Want to earn life-changing income from Jim’s trades? Click here for details.

John Persinos is the editorial director of Investing Daily.

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