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Well, zero in on Jackson Hole and what investors need to hear from Fed chair J. Powell in his speech on Friday. We want to bring in Satyam Panday. He is the chief economist of the US and Canada at S&P Global ratings. We're also joined by Eric Bailey, executive managing director of Wealth Management at Stewart Partners Global Advisory. Great to have both of you Satyam. Let me start with you here. We're trying to figure out what exactly we're going to hear from Fed chair J. Powell. How much is riding on the speech we're going to get on Friday? And just in terms of what likely then that ultimately means for the path forward here for the Fed?

Well, the speech on Friday, I think J. Powell is not going to really show exactly, uh, you know, what they're going to do in September. Although he may lean towards being more dovish than not, uh, but we do expect, uh, some kind of a signal coming in from either him or other, uh, Fed Central bankers in their interviews that they may be ready to cut a 25 basis point rate, uh, cut for September. Uh, there won't be much said about the next, uh, few cuts. I think they will be very data dependent oriented in their communications. And, and I think they should, uh, be like that. Uh, otherwise, I think more broadly, it would be nice to get a window into how they are seeing the transmission of monetary policy during easing cycle, uh, sort of pan out, right? An easing cycle would be different from a hiking cycle. So we would like to see how their reaction function changes.

Eric, what would you be watching for? What, what is your key word alert that you have set up going into this, uh, symposium this week?

Yeah, I think the markets are certainly expecting language that's going to show, uh, the Fed is, is dovish as Satyam said, and that, uh, as you guys said, they're expecting, you know, 75% are expecting a 25 basis cut. So we don't want any surprises. I mean the markets have had a very strong comeback from that, uh, August 5th sell off. And we've seen economic numbers, both the CPI and job numbers that have encouraged and, and given confidence to the markets, and we've seen that, right? The S&P is now back up over 17% year to date, only 2% from the highs, and we've seen very positive reaction from, you know, a slew of different corporate earnings. So, I think, you know, Jackson Hole the key is, is kind of to go with what the data has said and showing that, uh, an easing cycle is coming, whether it's September or, or very soon.

Eric, so what if we don't get any hints of a rate cut? What does that ultimately mean then for the market? Could we see a big sell off on that?

Yeah, I think a surprise would trigger volatility and a sell off. Certainly, I, I, I think, uh, you know, the risk trade has come back on. So I think you would see investors get more nervous and, and sell off the, the riskier parts of the market, go more conservative because, uh, rate cuts are expected. And so if that doesn't happen, yeah, I, I expect volatility would certainly heighten.

I mean, what, what's the likelihood Satyam from, from your perspective that we would still get some piece of data that upsets the Fed enough or gives them enough reason to say that we don't need to cut at this juncture because as of right now, their next meeting is going to be mid-September. Uh, the 17th and 18th, prior to that, we still do have a whole week of employment data that we're going to be getting in early September as well here. So is there anything within the labor market that the Fed could look back to and say, well, it seems like we've got strength there still. So ultimately, we don't need to do anything right now.

You know, uh, a lot of, uh, the data that has come out, uh, since the last meeting has been more on the side of cutting than not. And one more month of employment data that's going to come out between now and the September meeting is probably not going to change their minds, uh, unless there are major revisions upside. Upward revisions would do that, but, I, we don't expect that at all. In fact, we are expecting some backward looking, uh, downward revisions to payroll data. Uh, so there's a very high bar for them to think that they may, uh, need to hold or not cut at this moment in September.

And Satyam, just taking the other side of that, what is going to prompt them then to cut by 50 basis points? Is it going to be another weak jobs report similar to the one that we got two weeks ago?

Yes, it would have to be materially weak jobs report compared to the last three months average. And, uh, you know, the other high frequency data don't show that, but you never know. Uh, we may, if we get that in the first week of September, uh, there is a chance that they may go with a 50 basis point rate cut.

Okay. And so Eric, just putting the wealth management hat on now, what does that kind of portale for or, or hold for some of the investment strategy? What, what is the trade going into that next major Fed meeting that investors should be considering if they're not already kind of diversified in the way that many analysts and, well, many strategists have been telling us to be.

Yeah, well, you know, in the short term, clearly, I think you'd probably be a little cautious. You'd probably want to wait and react to what they say, uh, because if they, if, if they surprise and don't, don't give language that shows they're easing, you could see a sell off. And so in the short term, I'd probably be, um, I, I would be on the side of caution. But long term, I think equities, growth equities, clearly, uh, are, are, is the very strong trend we've seen now for, for a while in the markets. I, I would stick that course. I'd stick as with long-term growth investments, uh, because if we do get a easing cycle, which I expect, that area of the markets is going to continue to benefit.

Satyam Panday, who is the chief US and Canada economist over at S&P Global ratings. And Eric Bailey, who is the executive managing director of Wealth Management at Stewart Partners Global Advisory. Thank you both for joining us here this morning before the market open. Appreciate it.