Nasdaq: What will the 3-day meeting in Jackson Hole mean for us?

What is the Jackson Hole Economic Symposium?

The Jackson Hole Economic Symposium is one of the most anticipated events in the financial world, attracting central bankers, policymakers, economists, and financial market participants globally.

The Federal Reserve Bank of Kansas City has sponsored this symposium, which has been held at Jackson Hole, Wyoming since 1981. Every year, the symposium becomes the stage to discuss themes that have shaped economic discourse and influenced market dynamics. From critical announcements on monetary policy shifts to discussions on economic theory, the Jackson Hole Symposium can be considered an economic thought leadership incubator.

As such it can be considered as one of the most significant annual events on the global financial calendar which is closely watched by policymakers, economists, and traders alike. As it has the possibility to move the market or give insight to the outlook. Many influential people have spoken since 1981 and provided ground-breaking information for world economics.

Who attends and how are people invited?

The Jackson Hole Economic Symposium is by invitation only, making it one of the most exclusive gatherings in the financial world. The Federal Reserve Bank of Kansas City, which organizes the event, is responsible for extending invitations. The selection process is highly selective, focusing on individuals who have significant influence on global economic and financial policy or who contribute meaningful research and insights.

Central Bankers: Figures such as the Chair of the Federal Reserve, the President of the European Central Bank, and other high-ranking officials regularly participate.

Policymakers: government officials responsible for economic and financial policies, such as finance ministers and treasury officials, are often invited to contribute to discussions on global economic issues.

Economists: Leading academics and economists from prestigious institutions are frequently invited to present research and participate in debates.

Market Participants: Senior executives from financial institutions, including banks, investment firms, and international financial organizations, may also attend.

Select Journalists: A small number of journalists from respected media outlets are invited to cover the event, providing the public with insights into the discussions.

Past Speeches

1. Jerome Powell - Chair of the Federal Reserve (U.S.)
2. Christine Lagarde – President of the European Central Bank (ECB)
3. Haruhiko Kuroda - Governor of the Bank of Japan (BOJ)
4. Andrew Bailey - Governor of the Bank of England (BOE)
5. Janet Yellen - Former Chair of the Federal Reserve and current U.S. Secretary of the Treasury
6. Mark Carney - Former Governor of the Bank of England
7. Ben Bernanke - Former Chair of the Federal Reserve

Analysis of the NASDAQ over the past 5 years

For us to see the impact that the Jackson Hole meeting can have, I have looked at the past 5 years of Jackson Hole meeting and the price move the NASDAQ had, 1 month following the meeting.

2023: A Measured Response

Event Overview: The 2023 Jackson Hole Symposium was marked by cautious optimism. Federal Reserve officials acknowledged progress in fighting inflation but maintained a cautious stance on future rate hikes.

NASDAQ 1-Month Move: After the symposium, the NASDAQ experienced a modest gain of around 2%. The market was buoyed by the Fed's cautious approach, which alleviated some concerns about aggressive rate hikes, leading to a gradual increase in technology stocks.

2022: Hawkish Tone Sparks Volatility

Event Overview: In 2022, the Federal Reserve emphasized its commitment to combating inflation, signaling that higher interest rates could be sustained longer than previously anticipated.

NASDAQ 1-Month Move: The NASDAQ reacted with heightened volatility, declining by approximately 5% in the month following the symposium. Investors were spooked by the hawkish rhetoric, leading to a sell-off in growth-oriented sectors, particularly technology.

2021: Pandemic Recovery and Dovish Signals

Event Overview: The 2021 symposium occurred during a period of recovery from the COVID-19 pandemic. The Fed struck a dovish tone, indicating that tapering of asset purchases would be gradual and that interest rate hikes were still a distant concern.

NASDAQ 1-Month Move: The NASDAQ responded positively, rallying by about 4% in the following month. The dovish signals from the Fed reassured investors that liquidity would remain ample, supporting risk assets, particularly in the technology sector.

2020: The Pandemic's Peak and Historic Policy Shifts

Event Overview: The 2020 symposium was unprecedented, with the Fed announcing a significant shift in its monetary policy framework, focusing on average inflation targeting. This allowed for more flexibility in keeping rates low even if inflation exceeded traditional targets.

NASDAQ 1-Month Move: The NASDAQ surged by approximately 6% in the month following the symposium. The market interpreted the Fed's new approach as highly supportive of asset prices, particularly in a low-rate environment where growth stocks thrive.

2019: Trade Tensions and Market Uncertainty

Event Overview: In 2019, the symposium took place against a backdrop of escalating U.S.-China trade tensions. The Fed hinted at the possibility of future rate cuts to support the economy amidst growing global uncertainties.

NASDAQ 1-Month Move: The NASDAQ showed a mixed response, gaining about 2% in the month following the symposium. The market was volatile due to the ongoing trade war, but the Fed's willingness to cut rates provided some support to equities.

Conclusion

Over the past five years, the NASDAQ's 1-month performance following the Jackson Hole Symposium has been influenced significantly by the tone and content of the Fed's communications. Generally, dovish tones and signals of continued monetary support have led to positive market responses, while more hawkish stances, particularly regarding inflation and interest rates, have resulted in volatility and declines in the index.

The Impact of the Jackson Hole Economic Symposium

The ideas and discussions that emerge from this event often influence central banking policies globally. For instance, themes such as the implications of artificial intelligence on markets and the role of central bank balance sheets in financial stability have been explored in depth before they are put into action in the “real world.”

As the world continues to navigate challenges like inflation, rising debt levels, and technological disruption, the Jackson Hole Economic Symposium remains a critical venue for shaping the future of global economic policy

NASDAQ - Current Situation

Volatility has been increasing since Monday before the Jackson hole meeting starting today. There are huge hedges seen currently, however this can be attributed to August VIX options having expired yesterday. Volume is low for now, and it appears to be going with the tide of least resistance which currently has a bullish bias. Unemployment numbers going higher, job growth less than what we desire, so perhaps traders are expecting the Jackson hole speech being very dovish for Powell.

Timeframe: 1-Day (Daily)

Exchange: FOREX.com

Key Indicators

Price Levels:

Current Price: 19832

Resistance: 20065.5

Support: 17641.0

Moving Averages:

20-day EMA: 19128.7339

50-day EMA: 19094.1370

200-day EMA: 17986.9008

Bollinger Bands:

Upper Band: 20621.5710

Lower Band: 17566.7030

RSI (14): 42.2433

Stochastic Oscillator (14, 3, 3): 45.3641 (K-line); 23.5108 (D-line)

Analysis

The price is currently testing a key resistance level at 20065.5.

The moving averages indicate that the prices are well above the significant 20, 50, and 200-day EMAs, suggesting bullish momentum in the medium to long term.

The Bollinger Bands exhibit the price trending towards the upper band, indicating a potential breakout or overbought conditions.

The RSI is below the neutral level of 50, indicating room for upwards movement without overbought concerns.

Stochastic Oscillator shows that it's currently in the middle range, suggesting no immediate overbought or oversold conditions.

Conclusion

Technically the chart indicates mixed signals but with a slight bullish inclination.

Should the price break above the resistance level of 20066 with strong volume, further upside can be expected.

If the price breaks down before making the push above the 20066 level, The downside support level of 17641 will be the point of focus.