Weekly Commentary: Discounting The Loss Of Fed Independence

2025-08-23 05:00:46 ET

The Federal Reserve is under assault. Our nation, as we have known, is under assault. Equities, well, they seemingly couldn't be chippier.

Bloomberg: "Wall Street Gets the Rally Signals From Powell It Was Hoping For." The Friday rally saw the Nasdaq Bank Index jump 4.5%, the Dow Transports 3.3%, the KBW Bank Index 3.2%, the Semiconductors (SOX) 2.7%, the Bloomberg MAG7 Index 2.5%, the Broker/Dealers Index 2.0%, and the S&P 500 1.5%. The ARK Innovation ETF jumped 4.1%. The Goldman Sachs Short Index surged 3.4%.

Friday's "may warrant adjusting" triggered a decent squeeze and unwind of hedges, in a replay of the market's response to Powell's "time has come" 2024 Jackson Hole speech. An explicit signal of looser monetary policy on August 23, 2024, saw the S&P 500 gain 1.1%, MAG7 1.8%, the Semiconductors 2.8%, the KBW Bank Index 2.4%, the Broker/Dealers 1.8%, the small cap Russell 2000 3.2%, the Goldman Sachs Short Index 3.7%, and the ARK Innovation ETF 4.5%....

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