Week Ending August 20th, 2021

We saw the mild weakness in the markets last week due to the growing consensus that Fed is more likely to start tapering this year and the growing disruptions and lockdowns due to Delta Variant.

All investors are going to look for new clues from the Jerome Powell's speech at the virtual Jackson Hole meeting. I don't think he is going to reveal the taper timeline next week. I think he will double down on the effect of the delta variant on the economy and may point towards the some delay of taper plans.

Federal Reserve may take chance on Inflation for next couple of months in view of the rising covid cases but "no action" by the fed may also cause turmoil in the markets. The bears who are hoping for some correction may need to wait a little longer as some kind of bigger shock in the form of policy mistake is required. Moreover the huge amount of liquidity in the system acts as some kind of shock absorber when markets pull back even a little. But I advise investors not to rely on the 'buy the dip' camp to save every time market pulls back.