You know what you’ll hear on Wednesday? The most expensive “Good afternoon” from Jerome Powell.
The meme has taken on a life of its own. Whether he’s the financial supervillain tightening liquidity or the ultimate economic lifeguard saving markets from collapse, one thing is certain: Powell’s press conferences move markets… and social media feeds.
The most powerful “Good Afternoon” by Jerome Powell💰
— Nigel D'Souza (@Nigel__DSouza) September 18, 2024
pic.twitter.com/M4n3H6nSS2
If the news isn’t so cheerful, at least we can hedge our sorrows with a few well-placed bets in the rapidly growing “mention markets” across top prediction market sites.
The market on Kalshi, which opened Monday morning, has already pulled in hundreds of thousands of dollars in volume. Over at Polymarket, a similar market is running with $343,000 in action—in both cases, “Good afternoon” is a near lock.
But beyond Powell’s usual script, one word is looming over markets like a storm cloud: Recession. It’s been the elephant in the room for weeks, and now traders are wagering on whether Powell will finally say it. Kalshi has “Recession” leading the bets at 65%.
“There are no guarantees in the economy,” U.S. Treasury Secretary Scott Bessent told NBC’s Kristen Welker when asked if a recession is on the horizon.
What Powell might say and why
Other key terms gaining traction include “Projection,” “China,” “Credit,” “QT,” “Real Wage,” “Yield Curve,” and “Consumer Confidence.” Outliers such as “Trade War,” “Trump,” and “Egg” have also drawn wagers. Whether these long shots hit or not, Powell’s wording will be dissected for clues on the Fed’s next move.
The Federal Reserve meeting will be streamed live at 1 p.m. ET on Wednesday, March 17, which you can watch on YouTube.
'Recession' (65%)
Why Powell could say it: The U.S. unemployment rate ticked up to 4.1% in February, with layoffs increasing in tech, media, and government sectors. While the Fed maintains a soft landing narrative, Powell may need to acknowledge recession risks.
Market analysis: Likely to rise. With unemployment up to 4.1%, layoffs mounting, and consumer sentiment dipping, signs of a slowing labor market are clear. Powell doesn’t need a full-blown crisis to acknowledge recession risks, just the right mix of soft data.
'Balance Sheet' (65%)
Why Powell could say it: The Fed’s Quantitative Tightening (QT) process has reduced its balance sheet by over $1.5 trillion since 2022. With liquidity concerns growing, Powell is expected to address whether the Fed will slow or halt QT.
Market analysis: Steady. Powell’s past statements have consistently included balance sheet discussions. Unless there’s a policy shift, expect him to mention it again.
'Projection' (85%)
Why Powell could say it: The Fed’s economic projections, including the “Dot Plot” (20%), help set expectations for future rate moves. Powell will discuss whether GDP growth and inflation forecasts are aligning with the Fed’s outlook.
Market analysis: Stable. Projections are usually updated quarterly, so it’s almost guaranteed airtime.
'China' (49%)
Why Powell could say it: China’s economic slowdown and trade tensions remain key global risks. Powell could mention China in the context of trade wars (12%) or supply chain concerns.
Market analysis: Could rise. Trump’s new 20% tariff on Chinese imports has reignited trade tensions. The odds of Powell mentioning China are climbing.
'Credit' (32%)
Why Powell could say it: Credit conditions are tightening, affecting consumer and business borrowing. Powell might reference credit availability as a factor in the Fed’s rate decisions.
Market analysis: Stable. Credit conditions have held steady in recent months, with no major liquidity shocks or bank failures since early 2024. While borrowing costs remain high, corporate debt markets and consumer credit levels have not shown signs of distress.
'QT (Quantitative Tightening)' (35%)
Why Powell could say it: The Fed’s balance sheet runoff is a hot topic among policymakers. Powell may discuss whether the Fed will continue QT or consider slowing it.
Market analysis: Likely steady. As QT remains a core Fed strategy, Powell will likely address it.
'Real Wage' (30%)
Why Powell could say it: Wage growth affects consumer confidence (25%) and inflation. Powell may highlight whether real wages are keeping up with inflation.
Market analysis: Could rise. Recent wage data shows moderate growth, with average hourly earnings rising by $0.10 to $35.93 in February, a 0.3% monthly increase, and real wages up 1.2% year-over-year. While this suggests earnings are keeping pace with inflation, it’s not a dramatic shift. “Real Wage” is seen as a factor in the Fed’s inflation outlook.
'Yield Curve' (28%)
Why Powell could say it: An inverted yield curve has historically signaled recessions. Powell might acknowledge it as a warning sign of an economic slowdown. Powell has previously cited the short-term yield curve as a reliable recession predictor, notably in March 2022, when he pointed to the 18-month Treasury spread as a key indicator.
Market analysis: Likely to rise. The bond market is flashing recession warnings, with two-year Treasury yields dropping to 3.89% and junk bond spreads widening to a six-month high of 3.4 percentage points.
'Consumer Confidence' (25%)
Why Powell could say it: Consumer sentiment is crucial for economic stability.
Market analysis: Stable or fall. Powell tends to focus more on hard economic data than sentiment surveys.
'Crypto' (24%)
Why Powell could say it: Crypto regulation and financial stability concerns could bring digital assets into Powell’s discussion.
Market analysis: Unlikely to rise. Powell has generally avoided crypto discussions unless directly questioned.
Wildcard terms
Some traders are betting on wildcards—terms that are long shots but impossible to be said.
- ‘Egg’ (17%) – The price of eggs was driven high by bird flu.
- ‘Trump’ (12%) – Powell avoids politics, but the term could arise if asked about recent economic policy from the administration.
- ‘Default’ (22%) – With national debt concerns persisting, Powell could be asked about fiscal policy risks.
Will Powell drop a surprise?
While Powell’s language is typically measured, surprises can shake markets. If recession fears grow or China-related risks escalate in the immediate term, expect traders to adjust their forecasts. Conversely, if Powell remains focused on inflation and labor market resilience, the most likely words like “Tariff,” “Expectation,” “Projection,” and “Restrictive,” will remain at the top.
Regardless, one thing is for sure — we will certainly hear that powerful “good afternoon” when Powell hits that podium on Wednesday.
