August 22, 2025

(WHEN JAY POWELL SPEAKS, THE MARKETS LISTEN)

August 22, 2025

Hello everyone

THE MARKET IS HAVING SOME DOWNTIME

Come late August and going into September, the market typically experiences seasonal weakness. And it looks as though this year will be no different.

Even though “pattern-wise” bull market structure has not been broken, we could experience some sideways movement or weakness for several weeks or even a month or two. Many indicators are flashing overbought, but it’s important to understand that the market can continue in this state for longer than most people realize.

As I have said before, nobody knows what Jay Powell will do in September. However, when Powell speaks at Jackson Hole on Friday, it might give us some clues, even if they are very subtle. The market should then behave accordingly. There is some consensus that Powell will cut rates by a quarter percentage point in September, but let’s not put that in the bag until we see it. Others are quite sure that Powell will keep things as they are, with their main argument citing inflation and its sticky presence.

A no-move-in rates might irritate the markets and give it a case of the blues for a short time, but I don’t think it will descend into a deep decline about not receiving a “sugar hit.”

It will be interesting to note Powell’s take on the labour market and his views on the inflation pass-through from Trump’s tariffs. There also could be a subtle swipe at the Trump administration regarding the Federal Reserve’s independence. If Powell does choose to remark here, the comments will be cleverly cloaked.

How Tom Lee of Fundstrat sees the market closing out 2025

Lee has a bull case for this market. Something that many people don’t agree with.

He is predicting that the market could hit 7,000 by year-end, if a couple of metrics fall into place.

Firstly, he thinks the Fed needs to start cutting interest rates.

Second, Lee believes U.S. manufacturing activity needs to pick up again. We can track this activity by looking at the ISM Manufacturing Index. A 50+ reading signals healthy growth. Lee notes it has been stuck below 50 for over two years.

There is risk. If tariffs result in more inflationary pressures or the ISM stays weak, Lee says a target of 6,600 might be as good as it gets.

QI CORNER

Tian Yang (CEO at Variant Perception)

Cheers

Jacquie

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