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?
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: