Week Ahead on Wall Street: Jackson Hole

Estimated reading time: 5 minutes

Revisiting and Revising

Look, central bankers are people, too – and everyone deserves a vacation. This week, officials from the Federal Reserve and global central banks will meet in Jackson Hole, WY, for the Kansas City Fed’s annual economic symposium from  August 22 to 24. Of course, economists have a different idea from you and I about what it means to vacation.

The rather dry title of this year’s symposium topic –  Reassessing the Effectiveness and Transmission of Monetary Policy – might belie its significance, but will be particularly relevant given the intense investor focus on the trajectory of interest rates. The discussion will cover how central bankers are thinking about “long and variable lags” and how those relate to this financial moment. (Always ahead of the curve, we explored this topic two weeks ago using an innovative beef Wellington analogy.) Investors can expect an update on how Fed officials, and Chair Jerome Powell in particular, are thinking about the current economic outlook.

And considering the worrying trends that were already apparent before the August 2 jobs report clunker, there’s an interesting wild card at play heading into Jackson Hole. Preliminary annual benchmark revisions to jobs data for the period of April 2023 to March 2024 get released on August 21 – the day before the symposium officially begins. While the monthly jobs report provides timely data, it relies on employer surveys. The benchmark revisions, however, cross-reference these survey estimates against more comprehensive state unemployment insurance tax records.

Most economists expect the benchmark revisions to show that fewer jobs were added than initially indicated, with perhaps some half a million total jobs erased from the total (or nearly 50,000 per month). That would be a dramatic difference from the initial calculation, and would  suggest that the pace of job growth was about 20% slower than originally thought.

More than once Powell has said that the Fed will respond to “unexpected deterioration” in the labor market. Would 50,000 fewer jobs per month clear the threshold for unexpected deterioration? Or has the Fed already accounted for that possibility in its thinking? Either way, the revisions will color the conversations at Jackson Hole, influence the path of interest rates, and play a role in how relaxing central bankers’ vacation turns out to be.

Economic and Earnings Calendar

Monday

• July Leading Economic Index: This is an index composed of various economic indicators that have historically led changes in the broader economy.
• Fedspeak: Fed Governor Christopher Waller will deliver welcoming remarks at the 2024 Summer Workshop on Money, Banking, Payments, and Finance.  
• Earnings: Estee Lauder Companies (EL), Palo Alto Networks (PANW)

Tuesday

• August Philadelphia Fed Non-Manufacturing Activity: The Philadelphia Fed’s survey of services executives in the region on business conditions and their outlook.
• Fedspeak: Atlanta Fed President Raphael Bostic will participate in a fireside chat on innovating for inclusion. Fed Vice Chair for Supervision Michael Barr will deliver a speech on cybersecurity. 
• Earnings: Jack Henry & Associates (JKHY), Keysight Technologies (KEYS), Lowe’s Companies (LOW), Medtronic (MDT)

Wednesday

• FOMC Meeting Minutes: The Federal Reserve releases detailed notes of every FOMC meeting three weeks after their conclusion. Investors often look for more information on Fed officials’ views for hints on the outlook for interest rates and the economy.
• Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.
• Earnings: Agilent Technologies (A), Analog Devices (ADI), Nordson (NDSN), Synopsys (SNPS), Target (TGT), TJX Companies (TJX)

Thursday

• July Chicago Fed National Activity Index: This is a monthly index put together that incorporates 85 indicators from four categories: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories. 
• August S&P Global US PMIs: These indexes track how purchasing managers across different industries feel about the business environment. 
• July Existing Home Sales: Most home transactions in any given month tend to come from the existing market, and as a result set the tone for the broader housing market. 
• August Kansas City Fed Manufacturing Activity: The Kansas City Fed’s survey of manufacturing executives in the region on business conditions and their outlook.
• Weekly Jobless Claims: This high frequency labor market data gives insight into filings for unemployment benefits. Jobless claims have continued to show a labor market that remains strong despite having cooled.
• Earnings: Intuit (INTU), Ross Stores (ROST)

Friday

• July New Home Sales: While only a minority of home transactions in any given month come from new constructions, these home prices tend to be more cyclical and give insight into developing trends. 
• August Kansas City Fed Non-Manufacturing Activity: The Kansas City Fed’s survey of services executives in the region on business conditions and their outlook.
• Fedspeak: Fed Chair Jerome Powell will deliver a speech on the economic outlook at the 2024 Jackson Hole Economic Policy Symposium.
• Earnings: Dollar Tree (DLTR)

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