Iolcus Investments

What can upend -rather than just reverse- the current bull market of all assets?

The answer is the Fed changing interest rates, in an attempt to dampen inflationary pressures in a US economy overheated by fiscal and monetary stimulus; the bet now is that the rate hiking period is coming dangerously forward, ie early 2023.

But let’s talk facts: the recent CPI jump is mainly due to seasonal factors, ie goods and services like energy, used cars, etc. The FED, aware of these factors' transitory nature, publishes a “core CPI” stripped of the extraordinary items since 2004, which remains rather stable.

Another critical factor: rate hikes aren't easy for the Fed; any major US recession was the result of the Fed's rate increases accidentally converting anti-inflationary policy to recessionary; even an innocuous tapering exercise 2 years ago almost derailed the US economic growth.