Stocks closed lower yesterday ahead of Fed Chair Jerome Powell's speech at Jackson Hole this morning.

The markets opened mostly higher yesterday, but profit taking and position squaring quickly turned stocks around.

This morning's speech by Mr. Powell has many expecting him to lay out the case for a rate cut in September.

Fed Funds traders are pricing in a near certainty that the Fed does indeed cut on September 18. Currently there's a 75.5% chance they cut by 25 basis points with another 24.5% looking for 50 bps. Of course, nothing is certain, but those are the odds at the moment.

Wednesday's surprisingly large downward revision to the Bureau of Labor Statistics (BLS) jobs numbers (for the 12-month period of April 2023 thru March 2024), where they reduced the number of new jobs created/reported by 818,000 (the largest revision in 15 years), definitely supports the argument that the risk to the jobs market has increased, and that a rate cut makes sense.

Moreover, Wednesday's FOMC Minutes, which showed "the vast majority" of participants felt "if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting," also augurs well for a rate cut next month.

Although, it should be noted that there's still 3 more inflation reports and 1 more employment report due before the FOMC Announcement next month. And the Fed insists it will remain data dependent. But there would have to be a huge about-face for inflation to tick up enough and for labor to tick up enough to change the current sentiment toward cutting.

In other news, yesterday's Weekly Jobless Claims report rose 4,000 to 232,000, but came in under the consensus for 234,000.

Existing Home Sales came in at 3.95 million units (annualized) vs. last month's 3.90M and views for the same. That's a 1.3% m/m increase vs. last month's -5.1% pace. On a y/y basis it's down -2.5%, which is an improvement from last month's -5.1% annual pace as well.

The Chicago Fed National Activity Index slipped to -0.34 vs. last month's -0.09 and estimates for -0.15.

The PMI Composite report showed the Composite Index at 54.1 vs. last month's 54.3 and the consensus for 53.3. The Manufacturing Index was at 48.0 vs. last month's 49.6 and estimates for 49.5. And the Services Index came in at 55.2 vs. last month's 55.0 and views for 54.0.

And lastly, the Kansas City Fed Manufacturing Index improved to -3 vs. last month's -13.

In addition to Mr. Powell's speech today, we'll get a look at New Homes Sales, and the Baker Hughes Rig Count report.

With one more day to go, it's a mixed bag on the indexes.

Last week's gains were huge across the board. This week, the Dow is up for the week, so far, but not by much. The S&P 500 is up as well. A little better. But also not by much. The Nasdaq is down for the week (Not by much). While the small-cap Russell 2000 and mid-cap S&P 400 are up a bit for the week. (The mid-caps may be doing the best at the moment with a week-to-date gain of 0.62%.)

All eyes and ears will be on Mr. Powell this morning. He's expected to speak at 10:00 AM ET.

Should be a busy day.

Best,