Market Trends & Outlook

Do rising interest rates matter to the stock market? Many in the financial media and advisory community are scrambling to locate periods where rates rose along with stocks. Has it happened? Absolutely. However, it was only a function of timing until it mattered.

I've said it repeatedly over the last 5 years and it warrants repeating: nothing is more predictable than a consumers' propensity to spend. If you haven't implemented a consumer spending dedicated core equity position yet, you are missing a thematic that drives 70% of our $21 trillion economy. The same theme drives every major economy. How can anyone ignore a $40 trillion a year, highly predictable thematic in a portfolio? We can help you get right-sized for this opportunity.

I've said it repeatedly over the last 5 years and it warrants repeating: nothing is more predictable than a consumers' propensity to spend. If you haven't implemented a consumer spending dedicated core equity position yet, you are missing a thematic that drives 70% of our $21 trillion economy. The same theme drives every major economy. How can anyone ignore a $40 trillion a year, highly predictable thematic in a portfolio? We can help you get right-sized for this opportunity.

In the semi-annual Financial Stability Report, the Fed issued a stock market warning as elevated valuations are causing markets to be “vulnerable to significant declines”.

Charting the stock market “melt-up” in prices, and the Fed’s naivety of the laws of physics may be of benefit to younger investors. After more than a decade of rising prices, accelerating markets seem entirely normal, detached from underlying fundamentals. As a result, new acronyms like “TINA” and “BTFD” get developed to rationalize surging prices.

“The Fed’s an inflation creator, not an inflation fighter.” So said Paul Tudor Jones last week in an interview on CNBC. It’s doubtful that charge has been leveled at the Fed in at least half a century. William McChesney Martin ran the Fed for almost 19 years (1951-70) during a period that set the stage for the inflation of the 1970s, so it’s possible contemporaries were similarly critical. But it’s not a criticism that could have been made of Paul Volcker, Alan Greenspan or Ben Bernanke. Janet Yellen also avoided such a label although as Treasury Secretary she’s a high profile cheerleader of current policy.

“The Fed’s an inflation creator, not an inflation fighter.” So said Paul Tudor Jones last week in an interview on CNBC. It’s doubtful that charge has been leveled at the Fed in at least half a century. William McChesney Martin ran the Fed for almost 19 years (1951-70) during a period that set the stage for the inflation of the 1970s, so it’s possible contemporaries were similarly critical. But it’s not a criticism that could have been made of Paul Volcker, Alan Greenspan or Ben Bernanke. Janet Yellen also avoided such a label although as Treasury Secretary she’s a high profile cheerleader of current policy.

As many of us might know, inflation has been on the rise. According to the Bureau of Labor Statistics, the annual inflation as of September 2021 is 5.4 percent. In our previous blog post published on April 19, 2021, we identified 10 Nasdaq-100 stocks that we expected to do well with rising inflation and 10 Nasdaq-100 stocks that would not do well in such an environment.