Nowhere to hide in US stock market (except maybe oil)

US hedge funds have taken out the biggest bet on so-called cyclical stocks (autos, banks, and so forth) versus so-called growth stocks (tech) in years, according to brokerage-house notes to clients this week. But there’s nowhere to hide in this market.

The worst performers in the Jan. 19 market were Ford Motor Co. and General Motors – down 8% and 3.5% on the day, respectively. The next-worst performers were banks, supposedly a refuge when interest rates rise.

There’s no place to hide because inflation leads to recession. The Federal Reserve has signaled a 1.5% rise in its overnight rate during the next year and a “taper” of its securities purchases. Bond yields are rising in response.

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