In his much-anticipated speech this morning at Jackson Hole, Federal Reserve Chairman Jerome Powell is providing little clarity. He stated that the U.S. economy is in a favorable place but faces "significant risks" which isn't a profound insight and has offered little information about what the Fed may do next. Once again he has repeated that the "Fed will act as appropriate to sustain the expansion".
Essentially what we are hearing is that the Fed is data-dependent and is aware of the potential problems caused by the trade dispute and other issues.
So far the market reaction is very mild. Powell is keeping the option open for more aggressive rate cuts which is helping to create an underlying bid but isn't doing anything to ramp expectations for more aggressive cuts. There seems to be little likelihood of a half-point cut at the next meeting as some doves have hoped but the potential hasn't been totally foreclosed.
Without any big positive catalyst here I'm looking for selling to pick up later in the day as the market returns its focus to China's retaliation this morning. Obviously, the recent optimistic comments about negotiations were empty platitudes once again.
I've started some index shorts in the form of ProShares UltrPro Short S&P500 (SPXU) and am doing little else right now.