Bond Markets are Always Early… and Typically RightThe stock market is euphoric. It's rising faster than a 1999 internet stock! The bond market however does not share its new-found enthusiasm. It's starting to dust off the "recession playbook". Too early? Maybe... but it does remind me of an old Wall Street saying... "Bond markets are always early... and typically right"
Rates, Inflation and Oil to Dictate the NarrativeTune into any mainstream financial market headline - the narrative is bound to include inflation, interest rates and the price of oil. This is what's most likely to drive the price of stocks for the balance of the year...
Rate Hike History Lesson: Bottoming is a ProcessWith the Fed set to raise rates as much as seven times this year - how safe is it to meaningfully increase your exposure to stocks Is there more downside to come? And is the bottom for 2022 now in? These questions (among others) are top of mind for most readers.
Is this Near-Term Rally the ‘Real Deal’?This market has a '2007 feeling' about it. October 2007 to be precise. Approx. 15 years ago, markets were setting new record highs (up ~50% over 3 years) however the bond market was telling us something else.
Powell Reiterates ‘Price Stability’ Risk Fed Chairman Jay Powell has two very difficult choices. On the one hand - the Fed must do "all that it takes" to fight damaging persistent high inflation - where CPI could exceed 10% over the next few months. On the other - failure to address these risks pose a much larger threat to the economy.
Why It Makes Sense to Buy “Peak Fear”This post examines the annual returns on the S&P 500 if buying when the VIX hits (a) 35 and (b) 45 (i.e. peak fear). In summary, it pays the buy when everyone is selling....
Relief Rally as Powell Delivers 7 Rate Hikes for ’22Make no mistake - this was a hawkish Fed. Seven rate hikes this year is on the more aggressive side - but overdue. Powell adding the Fed are willing to move above neutral over the next two years... but stocks rallied on the news.
Markets Could see a Near-Term BounceAre we approaching a near or longer-term bottom? That's very hard to answer... but I do think we might be about to encounter a short-term bounce. That said, there are a few technical hurdles the market needs to overcome before we turn outright bullish.
What Typically Happens after Rate Rises?This post looks at how equities have reacted over the past 40 years to the initial rate rise from the Fed. In short, markets generally react positively to the first rate hikes... averaging more than 6% gains in the first 6 months.
Markets Searching for a BottomMarkets continue to grind lower faced with increasing uncertainty. Risks to inflation, Fed policy and the conflict with Russia and Ukraine remain at the top of list. How long before we see earnings revisions lower? That's likely to come...
