Ambiguity was minimal for Chairman Powell as he engaged Friday at the Jackson Hole speech, in more of what I'll call a 'mean reversion' approach to the Fed's current stance, rather than a 'policy reversal', as some analysts are now viewing the so-called friendlier (is obviously tepid) posture. However it was enough to power Equities substantially higher, and scramble shorts.

His focus: data-dependence with flexibility. He cited a 'shifting balance of risk'. That to me means he doesn't want the Fed to be behind events; but ahead of them if possible. Obviously he's thinking of tariffs impacting consumers, a bit later. If anything that's 'stagflation' environment; but they won't use the term.

As it relates to inflationary impact on 'prices', the speech is mildly dovish given AI and new-era tech (including drones) is the 'focus of markets', and minimally impacted by any tariffs (more so with certain hardware issues or components, less so with 'application software', which as you know is our focus much more so than mega-cap pricey techs). We remain strong holders of new-era tech at the same time we are leery about the S&P pressing against a rising-tops line.

If you want me to delve into market concerns; well certainly the optimistic call would be to overlook seasonal factors (as a hook to keep people out or far too negative); viewing this is still 'climbing a wall of worry'; which is serious keeps on doing, which under-lied our S&P allowance for this over quite some time.

One risk is that a September rate cut is will be fully priced-in 'before' the Fed acts, so it could set-up a sell-the-news event 'if' S&P holds up 'that long'. The other concerns might be geopolitical...ranging from Putin 'relenting' as media would have it to certain generals and political figures in Russia; by attacking both Ukraine's Intelligence HQ and Zelensky's personal Office, which thus far have been avoided, supposedly because Putin favors 'lawfare' over 'warfare'.

I think that's a crock, that the hypersonic missile threat is real, so perhaps we are getting a media variation (propaganda) intended to push talks forward on Putin's terms, or suggest that attack is coming if a deal's not struck. 

Market X-ray: the 'balance of risks' can vary as the Fall unfolds; so we'll just see if overall data persists on the track Powell alluded too; or is modified by events both globally and of course CPI and so on. Trump talk of firing 'Cook' is possibly sad (allegations more than facts); but is noise as relates to market.

The stock market relishes more liquidity of course; asset bubble or not (that can persist). The bond market might have liked Powell's talk more than stocks did, but Wall Street is basically reacting by minimizing recession risk (I haven't thought recession either; as 'stagflation' in consumer items, restaurants or in some travel for-instance, doesn't itself mean a conventional broad recession).

We are not tripping ourselves into a 1930's-style trade war; but of course risk is still there; the world has somewhat been intimidated into conforming with a series of demands by the United States; and the market is not responding to a domestic or global debate about the 'morality' of tariffs; although implications of tariffs on profits margins, costs and supply-chains aren't fully appreciated.

Meanwhile Indexes are broadly at-or-near-records, and the beat goes on with some tapering possibly ahead of the following holiday weekend.

Revisions to economic prospects; sharp changes in Labor levels, CPI, and so on obviously can impact the market behavior this Fall, or provide relief if there is somehow less effect than the shifting assessments about the tariff impacts. And of course avoidance of a European melee if Putin goes more nuts; and if the United States doesn't 'need' to invade or capture any South of the Border tyrants, or for that matter attack Mexican cartels (I'm seriously planning to visit Puerto Vallarta, when weather cools a bit; so let's not have drug wars there).

So things may not be as calm or stable as the Chairman implied in his efforts at a milder stance; but we'll see. Several factors could actually modulate it all, or help S&P closer towards the 7000 area; providing it can sustain any event like the non-farm payroll tilting negative sometime in the months ahead. We're trying to focus on markets, not just our favorite trading or speculative holds; at this point we need to take a gander at developments maybe not noted yet.

Bottom-line: late morning revealed that talks are ongoing between Canada and the United States; and Canada dropped some retaliatory tariffs on U.S. goods, after Trump & Carney had a telephone conversation yesterday.

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