Hoping once more for a pivot

Happy Wednesday, readers.?It is Wednesday, isn't it? With so many?U-turns?and?row backs?this week already, I wouldn't be surprised if the days also changed direction.

What's more,?after recent routs, it may be a surprise to see two straight days of hefty gains for US stocks, but that's what's happened so far this week. Now, hope is in the air for the?Federal Reserve to make an eagerly awaited pivot away from its hawkish policy.?

If all the twists and turns have you feeling disoriented, fear not. I'm Hallam Bullock, reporting from London, and I'm here to help you sort through it all.??

Shall we??

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1. There's some renewed hope for a Fed pivot on the horizon.?Australia's central bank surprised forecasters by raising interest rates by a less-than-expected 25 basis points, becoming the?first central bank to abandon its path of jumbo rate hikes.?

It was an unexpectedly dovish move,?and it caused investors to look around and ask whether the Fed might be next to pump the brakes on tightening monetary policy. The speculation alone was enough to buoy stocks, with the S&P 500 and Dow climbing 3% and 2.8%?respectively.?

"There were multiple factors driving the rally, but the main one was growing speculation that central banks could soon pivot towards a more dovish stance, particularly after the market turmoil over the last couple of weeks," Deutsche Bank strategist Jim Reid said.

Softer-than-expected economic data is also fueling pivot expectations.?Job openings in the US?tumbled to 10.1 million in August, JOLTS data showed Tuesday, coming in short of estimates of 10.8 million. Fewer job openings mean employers aren't compelled to offer more competitive wages. In turn, lower wages mean there is less money to spend, thus potentially relieving inflationary pressure.

Also on Tuesday, key US bonds yields tumbled for a second day?after topping 4% for the first time since 2008 last week. In part, this reflects investors pricing in some expectation of an end to rate hikes in the near future.?

As Fawad Razaqzada, a market analyst at City Index, put it: "there's quite a bit of 'hopium' in these markets."

But investors shouldn't get comfortable, as reporting season could throw cold water on any rally.?Morgan Stanley's Mike Wilson said investors?shouldn't wager heavily on a potential U-turn by the Fed. That's because an earnings recession still looks likely, regardless of central bank moves, and potential stock market downside from a sizable earnings shock would likely outweigh any potential Fed-driven boost.?

What do you think? Is a Fed pivot imminent??Let?us know in the comments.

In other news:

2. The CEO of JPMorgan's $2.8 trillion Asset & Wealth Management division explained why it's crucial to stay invested right now.?According to Mary Callahan Erdoes, opportunities abound in the current market.?Here are seven market areas she says are most ripe for gains.

3.?It's all about timing when it comes to thematic investing.?That's according to Jay Jacobs, BlackRock's US head of thematic ETFs. Jacobs shared two sectors to invest in to take advantage of disruptive technology innovations and global demographic shifts.?Check them out here.?

4. Alternative assets such as art and other collectibles "can potentially be recession proof," says a former NYSE trader.?You don't have to be rich to invest in luxury items, Lauren Simmons told Insider, "you can buy a fraction of a share and then get paid out once that painting sells."?Take a look at her investment strategy here.

5. American companies are pulling back on their hiring plans even as the Great Resignation rages on.?Job openings plummeted to 10.1 million in August from 11.2 million the previous month, JOLTS data showed. After an extraordinary period of job creation, the report is a?clear sign the labor market is cooling off.?

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This newsletter was curated by Hallam Bullock.