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How The Fed Just Launched The Next Bear Market: BofA's Unexpected Conclusion In 8 Charts

How The Fed Just Launched The Next Bear Market: BofA's Unexpected Conclusion In 8 Charts

While the afterglow of exuberance remains in stocks, BofAML's Michael Hartnett is less than impressed by what comes next...

As Fed hikes rates for the first time in 3,460 days, officially ending the era of extreme, abnormal monetary policy in the form of QE and zero rates, what do we see?

 

Risk assets were very oversold going into the Fed hike...they now bounce.

 

But the Fed hike follows significant tightening of liquidity; negative blowback is more and more visible, e.g. credit crunch causing less stock buybacks.

 

The Average Stock Is Just Shy Of Being In A Bear Market

Via Bryce Coward of Gavekal Capital blog,

As of today’s closing the S&P 500 index is quite literally in spitting distance of its all-time high as the markets cheered the first rate hike in a decade. Yet, as we noted here and here, most stocks are not quite acting as ebullient as one might expect given former.

Here is more evidence of just that. The below chart shows the average stock’s distance from its own 1-year high, which at 19% implies the average stock is just outside the threshold of being in a bear market.

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