Are Stocks Going Lower?
As stocks continue to consolidate, investors across the world want to know whether the next big move in equity prices is higher or lower. While it is impossible to answer with certainty, we can lean on what the macroeconomic data is telling us and then compare the historical returns of stocks during similar time periods. The bottom line is that we continue to believe that tighter monetary policy in the form of higher interest rates and a shrinking of the Fed’s balance sheet, during an economic slowdown, is not a positive force for stock prices. In this week’s update, we go into the factors driving these forces and how we are positioned.
Key Takeaways:
- The bear market rally lasted a few days longer than expected
- Aggregate earnings for the S&P 500 ex-energy is now NEGATIVE YoY
- We see that massive equity inflows chased a dangerous market ahead of the FED
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