What we learned from Jerome Powell’s big speech yesterday

In 1982, the Kansas City Federal Reserve planned its annual meeting. Officials hoped to expand the scope of the meeting and attract a “big name” to ensure more people would attend.

At the time, Paul Volcker was Fed Chairman. He took office in 1979 and was later credited with conquering the terrible inflation of the 1970s and early 1980s by raising interest rates as high as 20% during his tenure.

Although inflation fell below 3% by 1983, history had not yet proven Volcker right. But his attendance at the upcoming conference was sure to generate interest. So they came up with a plan. Volcker was known to enjoy fly fishing, so they wanted to hold the conference in a beautiful location known for the sport.

And it worked. Volcker attended that year, and the Jackson Hole meeting became known over the years as a meeting place where central bankers, journalists and policy experts from around the world came together to discuss monetary policy.

I mention this because the Fed’s Jackson Hole meeting just ended this week, and Wall Street has been waiting on tenterhooks all week for Federal Reserve Chairman Jerome Powell’s speech on Friday.

Investors hoped this would provide important clues about the Fed’s plans for interest rates. As I have been saying for some time, the big question is not really If the Fed will lower interest rates. Rather, it is about how much The Fed will lower interest rates and When.

So, in today’s Market 360, We’ll go over Powell’s speech again and highlight the key points. We’ll also talk about the bigger picture of the speech – namely, how recent economic data suggests that cuts are needed sooner rather than later. I’ll also explain how to best prepare your portfolio for a market of falling interest rates and the bursting of the “cash bubble” that the Fed helped create.