While normal people were pursuing life’s pleasures over the weekend, some of us had to park our wise pursuit of great experiences to concentrate on what US central bank boss Jerome Powell had to say at a conference in Jackson Hole, Wyoming.

Why?

Well, what Powell had to say was always bound to help or hurt stock prices this week, and possibly next week or for even longer. What he said wasn’t great news for stock prices nor anyone out there hoping the recent recovery of share markets would be sustained.

Since mid-June, the US S&P 500 Index has roared back 10.6%, while our market has rebounded 10.4%. But that’s about to change.

In case you don’t know, Jerome (who often gets called Jay by US commentators) is arguably the most powerful money man on the planet. He runs the world’s most important central bank i.e., the Federal Reserve. And while Helen of Troy allegedly could launch a thousand ships, this guy can move trillions of dollars with a simple sentence.

And one of those explains why the Dow Jones Index fell 1008 points (or a big 3%) on Friday, while the tech-heavy Nasdaq dived 3.3%.

Which sentence?

Probably this one: “Restoring price stability will likely require maintaining a restrictive policy stance for some time”.

To a normal person, it sounds innocuous but decoding his eco-speak, he’s saying inflation is still worrying him and his central bank buddies, so he’s going to keep raising interest rates. And he’s saying that if you thought he was going soft, forget it. He’ll probably show you that by raising rates by 0.75% in September, just when you might have been thinking he could go for a 0.5% or 0.25% hike.

The US central bank boss also threw this in: “The historical record cautions strongly against prematurely loosening policy”. And this is him saying that history tells him that it’s not wise to go soft when you’re using interest rates to scare consumers and businesses into spending less to beat down inflation.

Powell’s effectively gambling that he can come up with the Goldilocks play, where he uses interest rates to cool down a very hot, inflation-prone economy, but, at the same time, cool the economy, so the outcome is lower inflation and no recession. It’s a “just right” outcome he’s trying to cook up. And yep, what Jerome is trying to pull off is easier said than done.

So the big market influencers this week will be in sell mode to reposition their portfolios as indexes are set to fall. This market tone is likely to be with us until September 13, when the US gets its latest inflation reading where the critical number to remember is 8.5%.

That was the reading for inflation for July and it was down from the 9.1% statistic in June and started getting markets positive about the Fed starting to be less aggressive with its interest rate rises. However, Jay gave that optimism a stiff arm on Friday at Jackson Hole.

So now we wait. If inflation comes in with a 7% reading, the market will start getting optimistic again, but if it’s another 8% or higher number, then stocks will be dumped and the June low for stocks could easily be retested.

Between now and next Friday, we’ll see the latest US job numbers. The consensus view is that the Yanks could’ve created 300,000 jobs in August. The lower the number, the more optimistic the market will be and vice versa.

Fewer jobs created will be a sign that the “too hot” US economy is starting to cool, but a bigger number will have the opposite reading.

For data-lovers out there, the US statisticians will spit out a pile of economic indicators that could get the market excited or deflated, including home prices, consumer confidence, US purchasing managers numbers, construction spending, factory orders, job cut figures and then the unemployment and employment readings, which also have hourly wage information as well. The latter can be useful in guessing what’s happening to inflation.

Locally, the economic readouts are less exciting but we will see home prices, business investment, purchasing managers ordering and our leading indicators for the overall economy.

Our central bank boss Dr Phil Lowe is playing a similar rate-rising game to lower inflation, but he’s less aggressive because our inflation isn’t as bad as Jerome’s. But Dr Phil has a habit of playing follow-the-leader with his Washington-based mate from the Federal Reserve.

The bottom line is this: pray for lower inflation if you want interest rate relief.