The Market: Prepping for Powell

"Wake me up when September ends."

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Discussion

There’s something about September and Jerome Powell. Easing, tightening, or holding steady, the S&P 500 has corrected post-September FOMC for the last five years. Setting 2022 aside, perhaps it goes something like this: JPOW feels at great ease at JHOLE the month before, spreading his dovish wings and taking SPY with him into September, then monetary policy reality hits the market in the face.

With SPX sentiment and 10dma breadth having reset higher, the VOL complex in correction mode, IG CDX sticky, and Fed Fund futures pricing out of step with survey-based FED policy expectations, all against the backdrop of negative “September Powell” seasonality, the stage is set for the downside portion of the “extreme chop” discussed in The Week Ahead.

Analysis