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: