From the desk of Willie Delwiche.
Key Takeaway:
- 2022 gives investors no place to hide.
- Stocks do well when rates rise slowly - an aggressive Fed is a headwind for investors.
- Hard to argue that a bear market has run its course when more stocks are making new lows than new highs.
The future’s market now expects 50 basis points of tightening at this week’s FOMC meeting to be followed by another 75 basis points of tightening at the June meeting. On top of the 25 basis point rate hike in March, that would be 150 basis points of tightening in just three meetings. It’s been a long time since the Fed moved at such an accelerated pace. For equities, not all tightening cycles are created equally. Stocks can hold up well when the Fed is pursuing a deliberate pace, but tend to suffer in periods when the pace of rate hikes is rapid.
