Don't Read This! You've Read Too Much on Jackson Hole.
History shows the hype around remarks at the annual Federal Reserve symposium is usually overdone. Economic data holds the real keys to the market's future.
Jerome Powell is unlikely to rock the boat in Wyoming.
Photographer: Drew Angerer/Getty Images
The level of hype heading into the annual central banking symposium in Jackson Hole, Wyoming, is even more intense than usual, and it’s easy to understand why. The US is battling the worst inflation in four decades, and investors are eager to sniff out clues about the Federal Reserve’s next moves. But history shows that all the brouhaha is overdone, and the real direction in markets will come from economic data streaming in over the ensuing months.
By the numbers, Jackson Hole is almost never the pivotal moment it’s made out to be. In the past decade, the S&P 500 Index has lost 0.2% on average on the day of the marquee Fed speech (usually the chair’s address). The index was typically up 0.5% after five days; 0.1% after 20 days; and 4.5% by the end of the year, counting from the day of the speech. In other words, the typical moves are less than one standard deviation, and there isn’t a whole lot of dispersion around the mean. The chair’s speech is generally no big deal.