Pro Macro: Deep Dive – Accelerative Oscillations

Published on: January 28th, 2022

QE and financial repression have driven US equity prices higher since the GFC. Can those prices survive QT and rate hikes? The Fed has a tightening framework in place, but will it be hijacked by a serious correction in the equity market? Equities will fall until we discover the ‘strike’ price of the “Powell Put”.

Comments

  • SB
    Stephen B.
    28 January 2022 @ 19:58
    5 0
    Great stuff, as always, Julian. Thanks
  • TE
    Tom E.
    28 January 2022 @ 20:15
    3 0
    Thanks Julian. Great brain food.
  • Dd
    David d.
    28 January 2022 @ 20:51
    4 0
    Julian, Informative write up - thank you! What are the percentage odds of Jeremy Grantham’s “super bubble” crash occurring this year? Value your opinion / thoughts very much! Thank you.
    • JB
      Julian B. | Contributor
      28 January 2022 @ 21:23
      17 0
      I hope it was perfectly clear from the last Insider Talk that I'm very worried. The Fed has left policy normalisation FAR too late. That means they have to go fast, which in turn significantly raises the risk of a policy error. Add that to excesses, especially in the US equity market and the risk of a very sharp correction is real. As for Grantham's call for a 43% drop in the S&P that seems a bit extreme. But 30% late this year isn't impossible.
  • PA
    Paul A.
    28 January 2022 @ 21:40
    5 0
    As always, your explanations are illustrative, but I think that because the writing is excellent.
  • JW
    JW2 W.
    29 January 2022 @ 16:51
    1 0
    Well written. A little scary, what with these oscillations that can easily get out of control - that bridge analogy - so happy to keep following your insights during the year and hopefully we can cross that bridge before it collapses :-)
  • SS
    Shanthi S.
    29 January 2022 @ 19:33
    2 0
    Thank you Julian. So well written. Yikes.
  • SP
    Stephen P.
    30 January 2022 @ 11:41
    1 0
    Julian - well written as always (you would pen excellent horror stories too I think!). I look forward to your recommendation as to where we should quickly run & hide before this economic bogey-man arrives!