Is Fed Pivot Bullish?
It's possible that the Federal Reserve's rate policy has made investors oblivious to economic realities that will eventually squelch any rally in the stock market.
Rich Weiss, the chief investment officer for multi-asset strategies at American Century Investment, noted that Fed-induced pandemic recovery is dominating today's investors who are conditioned to the success of dip buying. As much as investors cheer the Fed pivot, the reality is that by the time interest rates are reduced, the economy is usually too damaged for stocks to go anywhere.
Strategists from Morgan Stanley to JPMorgan warned that the bear market was not yet over, citing the threat of profit contraction and more restrictive Fed monetary policy.
Investors betting on a dovish Fed should reconsider, according to Jason Trennert, the chief investment strategist at Strategas Securities LLP. His team found that a genuine shift to accommodative monetary policy often meant pain for equity bulls.
The bullish expectation is that the bear market will come to an end when the Fed finally executes a policy pivot. While there is nothing wrong with that expectation, it might not happen as soon as the bulls anticipate.
In the past, interest rate cuts by the Fed might have not signaled the end of equity bear markets, but rather their beginning.
Most bear markets might happen after the Fed's policy pivot, not before.
Source: Bloomberg, Investing.com
Disclaimer: Investing involves risk and the potential to lose principal. Past performance does not guarantee future results. This is for information and illustrative purposes only. It should not be relied on as advice or recommendation.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Alvin_YiDa : time to all in inverse ETF ！
Bruce pain : we shall all see very soon
razo2 : terminal rate expected next year march/April. so don't rally long until then. just day trade.
Giovanni Ayala : @Ripper1986@SpyderCall@bullrider_21@Alvin Chow 邹咏翰
The BIZ : this was very informative and I am very glad you shared that perspective. I think your right although this bear market rally was fun, I think it's petering out.
The BIZ Alvin_YiDa: which do you suggest? do they have option contracts available for them?
Violets : Still wonder what that CPI number is going to show? Up or down. Regardless our inflation is terrible but I'm very interested to see if we're improving at all.
Giovanni Ayala Violets:
sensitive Manatee_69 : Bear markets will not end at the start of a fed pivot, we as still in a “lag effect”, meaning the economy hasn't yet felt the pains of the previous interest rate hike. The fed pivot doesn't guarantee a bull market rally. The economy is still very bad and only going to get worse despite the feds possibilities of raising interest rates by only .50 bases pints this upcoming Wednesday. With that being said keep a look out for the cpi report this week. TThat'll give a slightly more clear direction of how the feds will go about raising rates.