In our last Insight I predicted that after the Fed’s rate hike we would see the market sell off and then rally. We got that part right, but now what? Is this the final lasting rally or just another short-lived bump?
The Fed raised rates by 0.75 percent and the market celebrated…before it sold off. I believe we have seen this movie before. Is the market being overly pessimistic?
It isn’t really inflation that scares the market, it is the Fed’s reaction to inflation that scares the market. Market participants fear that the Fed will put us into a recession in their effort to get inflation under control.
