What is the Jackson Hole Symposium?
The Jackson Hole Symposium traditionally takes place in the picturesque area of Jackson Hole Montana. However, due to COVID-19 precautions, this year’s symposium will be held virtually. The Jackson Hole event is one of the longest-running conferences for global central bankers with 140 central bankers, Nobel prize winners and other economic pundits in attendance. The first symposium took place in 1978 and has been a widely watched event ever since.
Why is the Jackson Hole symposium important for the markets?
With so many high-profile central bankers and economic academics in attendance, market participants have watched the event very closely over the years for any important economic outlook and monetary policy updates. The Jackson Hole event can help shape portfolio strategy for market participants as they prepare for future market developments.
When is this year’s Jackson Hole Symposium taking place?
This year’s event, “Macroeconomic Policy in an Uneven Economy” will be held:
Thursday to Saturday, August 26th to August 28th.
What will markets be watching for this year?
All eyes will primarily be on the head of the U.S. Federal Reserve Jerome Powell. The U.S. central bank sets the tone for global central bankers, a leader of sorts. Last week, the Federal Reserve released their latest meeting notes which underscored a divided committee. The committee is grappling with a mix of recent economic data. Notably, strong jobs data proved to show signs of economic health, while lacklustre consumer sentiment and a rise in COVID-19 delta variant cases highlighted risks in the near to medium term. There has been some whispering taking place, hinting that Jerome Powell (head of the U.S. Federal Reserve) may use the Jackson Hole Symposium as a platform to announce the central bank's plans to begin tapering their asset purchase program. What exactly does this mean? Essentially the Federal Reserve has been purchasing financial securities in the open market to help support the economy and the market. Consider it a form of medicine the central bank has been injecting into the economy to help ease the economic pain caused by the COVID-19 pandemic. At some point, the Federal Reserve needs to begin weaning the patient (economy) off this medicine. That time is approaching. The market will be listening to the symposium closely for any signal as to whether Chair Powell will provide more clarity on their plans to begin reducing this economic medicine. Other economic discussions will also be taking place, but the U.S. Federal Reserve keynote speech is the main event.
What does this mean for the market and how Matco is managing your portfolio?
An announcement by Chair Jerome Powell to begin tapering their asset purchase program could put upward pressure on interest rates, while modestly softening the economic outlook. Within the Matco Fixed Income fund, we have been positioning the portfolio for the possibility of rising interest rates by investing in relatively shorter bonds than the broader market. We have also incorporated a position of preferred shares in staggered maturity terms. This position will perform well when 5-year interest rates begin to rise. Within our Matco equity funds, we are in the early stages of adjusting our portfolio positioning to more defensive investment sectors and companies. These adjustments will allow our equity portfolios to navigate through any possible deceleration of economic growth. Our investment process at Matco, the M-Factor, is highly focused on economic and investment fundamentals. We concentrate on these fundamentals as a disciplined approach to our portfolio positioning. We are constantly revisiting our portfolio positioning based on the evolution of these fundamentals while looking well into the future to ensure we are actively positioned to preserve and grow the capital of our clients.
Is your portfolio positioning properly prepared for the evolving landscape?
Please contact me, Trevor Galon, if you would like to discuss further.
Trevor Galon, CFA
Chief Investment Officer
Founded in 2006 to manage and service seven family offices, today Matco offers the benefits of our extensive investment management experience to individual investors, foundations, endowments, condominium corporations, trusts, corporations and not-for-profit organizations.
Our mission is to simplify the investment world for our clients by understanding their needs and providing exceptional investment solutions that preserve and grow capital.