Bull or Bear, and does the Fed care?

As equity risk premiums dwindle and financials falter, where do we sit in the market cycle and where are we going?

Dear readers,

With ~85% of 2023 behind us, performance in the stock market has started to tumble lately. Not only are investors foaming at the mouth looking at 5% interest on 10-year US Treasuries, but the companies that stock prices rest on may be starting to feel the pain of a Fed hellbent on slowing US business activity.

With all of this in mind: are we in a bull or a bear, and does the Fed even care?

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First, let’s zoom out to get historical analogs of the S&P 500’s performance over the past 6 years; 2023 has been a comparatively positive year—performance has defied all of the macro doom and gloom narratives that had dominated the S&P 500 from its all-time highs in late 2021 to its recent failed attempt at surpassing them. It is most closely following the 2018 seasonal path of strong performance to start with a neutral turn in the summer and a fall into the end of the year to match the season’s name: