There is now a high probability that the Fed will announce lower interest rates as soon as tomorrow in a Jerome Powell speech at Jackson Hole (see link below). The first Fed lowering after a series of tightening is historically a bearish trigger for stock prices as it is an admission that the economy is slowing into a recession, or worse. If so, these long stock positions in the PRO portfolio are at risk: PRO Long Stock Positions Consider reducing exposure to the long side by taking at least some of any profits still held in these positions in advance tomorrow's speech by Jerome Powell. If all is well and the market is full speed ahead after this speech, we can put that money back to work afterwards. After Powell gives his Jackson Hole speech, the markets may wish they’d never heard it "The financial markets are likely to be a bit disappointed in Powell after Friday’s speech. The markets have already backed away from the panic pricing of a couple of weeks ago, including high expectations of a half-point cut in September. With Powell giving a slow-but-steady easing message, I expect modest downward pressure on both bond and stock prices." In other words, the relative calm of the past few weeks will be put at risk, almost no matter what Powell says tomorrow. This is a rare occasion where a news event affecting short-term market volatility is known a day in advance, but what direction and velocity of the move is unknown.
