Powell Speech Fallout: Tech Stocks to Face Resistance; Gold, Silver to Rally?
Last week, everyone had their eyes fixed on what Jerome Powell would say at the Jackson Hole event. The big question was whether he'd once again try and sound cautiously hawkish.
Many interpreted his words that way, though the reality was a bit different. In truth, there wasn't much to anticipate as toning down concerns about inflation was seen as a risky move.
Sure, the speech was touted as a crucial event, and although it aimed to convey a forceful message, it didn't actually bring any fresh insights.
In essence, the summary can be boiled down to one simple sentence:
«Our objective remains focused on achieving and maintaining a 2 percent inflation rate.»
This isn't exactly revolutionary news, which is why the market's response was somewhat subdued when compared to the buildup before the speech.
As of today, the odds for a rate hike in September stand at around 20%, with the likelihood of a November hike hovering at approximately 45%.
The Fed seems to have forgotten about 2020, a year when it caused higher inflation through helicopter money.
However, the focus has shifted, and now it's aiming for lower inflation. It's possible that both the Federal Reserve and other central banks might achieve their goal of promoting disinflation.
In 2022, tech stocks surged to a peak of 29% within the S&P 500 but then experienced a decline from late 2022 to early 2023.
Source: BofA Global Investment Strategy
However, they've recently staged a resurgence, reasserting their dominance in the index and accounting for approximately 28% of the total market capitalization.
Currently, the Technology sector (NYSE:XLK) appears to be encountering a hurdle as it remains below the highs from the prior cycle.
Interestingly, a similar candlestick
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