Jerome Powell is arguably the most powerful economic man nowadays behind the Mr T of US politics, Donald J. Trump. This is because the central bank boss is the main man when it comes to what will push stocks up or down in the short term.

Spoiler alert! While I am positive on stocks short term, I’m not so sure longer term. How long am I likely to be comfortable being exposed to stocks before I go defensive? Try at least into the first quarter of 2026, however, by mid-year, I could be pondering the history of Wall Street that says it often works to “sell in May, come back on St. Leger’s Day!”

For those not up with UK history, St. Leger’s Day is a festival occasion involving fairs and horse races. It coincides with stockbrokers, bankers and big market players coming back from their northern hemisphere summer break. Before then, in the age of no internet, computers or mobile phones, stock prices did little, while some investors took profit before heading to the continent for a holiday.

The Stock Trader’s Almanac says: “Historical data reveals that the top performing 6-month rolling period, on average, has been November through April” and Feidelity.com says “hence, the (antiquated) saying investors should “sell in May and go away"—and come back in November.”

Here's Fidelity’s investment team again: “Since 1990, the S&P 500 has gained an average of about 2% from May through October. That compares with a roughly 7% average gain from November through April. This outperformance is seen not just in large caps, but also small-cap and global stocks (as measured by respective S&P indexes). What’s more, rotational strategies across market caps have historically shown even better average performance”.

 But these are generalities. This year May to August has been pretty good, with the S&P/ASX 200 index — the best reading for our stock market — up about 10%!

Against this, 2025 has been crazy because of Trump tariffs. Given the President’s inclination of the unexpected, who knows what will happen next year?

That’s why I’ll be monitoring Donald, economic data and market reactions between now and mid-2026, especially with stock markets around all-time highs.

We broke 9000 for the first time on the S&P/ASX 200 index, so that makes me cautious, while positive.

Right now, US markets are happy that Powell is now talking about interest rate cuts as he’s getting more concerned about a slowing economy and rising unemployment than he is about inflation taking off again.

Rate cuts excite stock markets, especially if there’s no recession in sight. These rate reductions would be seen as pre-emptive cuts that could help the US avoid a recession and kickstart an economic recovery.

The big question for economists, investors and even the Trump administration is what effects will these tariffs have on inflation, consumer spending and business investment in the US?

This will be the story that people like me will be monitoring closely. If the run of economic data or the Trump decisions threaten the success of US companies, then my guarded optimism about stocks will change.

At the moment, falling interest rates in the US and here, plus AI’s help to lower costs for companies and Trump’s promises of lower taxes and deregulation are all keeping markets positive.

Last Friday, Jerome Powell helped optimism for stocks with his revelations at a Jackson Hole Wyoming conference attended by the world’s central bankers. While he didn’t say “we will be cutting in September and beyond”, that’s what market experts think they heard buried in between the lines.

The next big market worries will be the PCE inflation reading that Powell and his team think is the best indicator for what’s happening to prices. That’s on Friday. The day before will be the latest US economic growth figure. Then the week after that, the August employment report.

If Wall Street doesn’t see any concerns about inflation or a recession, then stocks will keep on rising. After that, it will be the final deal between Trump and Xi Jinping on China’s tariff deal.

When we get across these potential hurdles, my short-term call for stocks will be on the money.

Then it will be 2026 and while investing with Mr T isn’t likely to get any easier, at least we won’t have the tariff anxiety that began on April 2 — the so-called Liberation Day. All I can advise is — watch this space!