(Bloomberg) -- Stock investors will want to hear the advice Principal Global Investors’ Seema Shah is offering Jerome Powell because if he follows it in Jackson Hole next week, the market is headed for a fall.

The Federal Reserve chairman and his colleagues at the Aug. 25-27 economic symposium in Wyoming will “need to talk to the equity market,” the firm’s chief global strategist told Bloomberg Television’s Surveillance on Thursday. 

“There is a split between the equity market and the bond market,” she added. “The bond market is very negative about the growth outlook whereas the equity market seems to be very optimistic about pretty much everything. That is where you’re getting the easing of financial conditions in the past month.”

The S&P 500 is heading toward its fifth straight week of gains after retracing half of the losses notched between its January peak and June nadir, despite evidence that a recession is at hand. Meantime, the widely-watched gap between two- and 10-year US yields has moved from about 5 basis points in July to -37 on Thursday. The trend of short-term Treasuries yielding a premium over longer-term debt is widely regarded as a harbinger of economic malaise.

Shah sees the recent stock-market rally as wrong-headed, given that the Fed still faces the fastest inflation in decades even after raising overnight lending rates to as high as 2.5% from near zero this year.

Powell has “to push back against easing financial conditions,” she said. “They need to slow the economy down. And that’s what’s been happening in the last couple of weeks as the market has become a little bit more dovish. The market unfortunately has undone a lot of the hard work that the Fed has been doing over the previous months.”

Some stock investors are embracing a view that if the economy slows enough, the Fed will stop raising rates sooner than anticipated. The central bankers “need to get back in control of the situation,” Shah said. “And that does mean he needs to talk a very hawkish game next week and hopefully that will be enough to convince the market.”

She believes the Fed chairman has to acknowledge that the economy “is slowing and is likely to slow further. Then he has to say that despite slowing economic growth they still have to continue raising rates. They have to do that because containing inflation is the number one priority. That’s what we need to hear from Powell next week.”

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