Stocks will fall if the Fed does not become more aggressive: James Bianco

The next decisive moment on Wall Street for equities could come from 2,000 miles.

Jerome Powell, head of the US Federal Reserve, will deliver the keynote address at the Jackson Hole Economic Policy Symposium on Thursday.

If Powell does not solve the wild fluctuations of the stock market and the recent reversal of bearish bond yields, market researcher James Bianco warns that the reaction will be violent.

"We could see a further rate hike, we could see a further decline in yields and the yield curve, as well as more volatility and market problems, and it should evolve aggressively." said Friday the chairman of Bianco Research at "Trading Nation".

Despite Friday's strong rally, the leading indexes had another negative third week in a row. The Dow, S & P 500 and Nasdaq are now at least 5% below all-time highs.

Last week's stock turmoil was triggered by the 10-year US Treasury yield that fell below the 2-year rate for the first time since 2007. It is often seen as a harbinger of a recession.

According to Bianco, the street is desperate for the sign that a deep reduction is imminent because US rates are too high in relations with other developing countries during a period of economic slowdown.

"We are the only place on the planet where developed countries have a return above 2%," said Bianco. "Powell should probably open the door to the possibility of a 50 basis point cut at the September meeting."

It would not be unprecedented for Powell to try to calm the market in his welcome speech at Jackson Hole. He quieted the street early January and in June during his opening speech at events, noting that the Fed would act more accommodating.

Bianco hopes that Powell will do it again, adding that it would be a serious mistake on his part to generically host the conference attendees and avoid the market 's problems.

"It could be the worst thing," he said. "The next worst thing is that he makes comments that are interpreted as" we will only move 25 basis points. Then we will wait and see if we will do any more. "The market rolls its eyes and says," You do not get it. We want you to act faster. "

For now, Bianco resists in the best case, which suggests a substantial reduction next month.

"If it reacts more aggressively with a 50 basis point reduction, I think the market will react very positively to that," said Bianco.