Week Ending August 29th, 2021

Investors bought the stocks last week as it appeared to most of the participants that mild weakness in the stocks was a good opportunity. Markets looked nervous and traded in a narrow range after last Monday's rally as all were waiting for Powell's remarks. And on FridayPowell gave a calibrated dovish speech which I think is again looking positive for the stocks in the medium term.

It appears that Fed has decided to take chances on inflation as rising inflation still looks transitory to them. In these circumstances I think there is no alternative left except to buy the stocks for the investors. Moreover as Powell suggested on last Friday that rate hikes will not follow the tapering immediately so I think rates are not going to rise at least till last quarter of next year.

It may appear to many that we have wide open road ahead and it's time to push hard on gas pedal now, but I advise investors to be more cautious now as inflation worries are still here and policy mistake seems unavoidable to me.