Equity strategists drown in Fed maelstrom

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The equity market narratives coming from Wall Street are starting to sound positively hysterical. Throughout this year we have seen three dominant narratives:

  • Good news is bad news as rising inflation will bust the stock market pushed largely by BofA.
  • Bad news is good news as temporary inflation giving way to deflation will keep stock prices elevated.
  • Good news is good news because a spike in inflation will rotate stocks from growth to value supporting headline index levels, pushed by yours truly.

As the Fed pushes towards tightening too early, we can now add a fourth narrative: bad news is bad news as policy error crashes stocks. I will come back to that. First, here’s Deutsche with a great wrap on where we are:

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.