The Fed Annoys. The Outlook Remains.
Well that was a week. And then today was a day.
Stocks are all over the place. Friday was a big ol’ drop. Monday looked the same until about an hour before the close, when dip buyers rushed in and turned an almost 4% loss into a halfpercent gain for the S&P 500.
Someone I follow on Twitter looked for previous times the markets have bounced that much in a day. Since 1977, the S&P 500 has only recovered from an intraday loss of more than 3.98% three times.
Jim Bianco followed that look-back with this comment:
We all know why the volatility: the Fed. I’ve talked at length about why the start of a rate hike cycle is having such repercussions. In short: higher rates challenge companies that are addicted to cheap debt and the bond market is losing a huge and price-insensitive buyer (the Fed) who may soon even become a seller. Together, those forces could mean significantly higher debt service costs, which would threaten profits, and profits are the most important and consistent correlation with rising share prices.
On a more arm-wavey level, the Fed’s shift from ultra support to inflation-fighting tightening is being taken as
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