Browbeaten Stock Bulls Wilt in the Face of Rising Fed Hostility
- S&P 500’s 19% drawdowns tended to foreshadow inflation peak
- ‘Equity market will be the catalyst’ of slowdown: TS Lombard
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In retrospect, bulls should maybe have been more worried that one of the most reliable tools the Federal Reserve has for subduing inflation is to scare the US equity market. They’re getting the message now.
Its hands tied when it comes to unwinding supply snarls and tight labor markets, Jerome Powell’s central bank has made an unusually explicit target of asset prices, with one Fed bank president, Neel Kashkari, going as far as saying he was happy to see shares tank after Powell’s hawkish turn in Jackson Hole, Wyoming. The result has been a big dose of pain for investors, with the S&P 500 down five of six days in the meeting’s aftermath, ending the week lower by 3.3%.