What we learned from Jerome Powell’s big speech yesterday

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

At the time, Paul Volcker was the chairman of the Fed. He took office in 1979 and would later be credited with defeating the terrible inflation of the 1970s and early 80s by raising key interest rates to a peak of 20% during his tenure.

Although inflation would fall below 3% by 1983, history had not yet vindicated Volcker. But his presence at the next meeting certainly attracted interest. So they came up with a plan. Volcker was known to enjoy fly fishing, so they would hold the meeting in a beautiful location known for the sport.

It worked. Volcker attended that year, and the Jackson Hole meeting became known over the years as a place where central bankers, journalists and politicians from around the world gathered to discuss monetary policy.

I bring this up because the Jackson Hole Fed meeting just ended this week. And Wall Street has been waiting on pins and needles all week to hear Federal Reserve Chairman Jerome Powell’s speech on Friday.

Investors hoped it would provide important clues to the Fed’s plans for key interest rates. As I’ve been saying for a while, the big question isn’t really about if The Fed will cut rates. Rather, it is about how much it costs The Fed will cut rates and When.

So, in today’s 360 Square, we’ll review Powell’s speech and highlight key points. We’ll also talk about the big picture surrounding the speech — namely, how recent economic data points to the need for cuts sooner rather than later. I’ll also share how to best position your portfolio in a falling rate market and the bursting “cash bubble” that the Fed helped create.