Bank of America said the stock market rally echoed the bear market trend at the start of the Great Recession.
Strategist Michael Hartnett believes that since 1929, the S&P 500 has gained more than 10% on average in 43 bear market rallies, 17.2% in 39 trading days and 17.4% in 41 days. The “textbook” case. Bear market gains are always small, and in this case, the S&P 500’s 30% gain is attributed to just four stocks: Amazon (AMZN.US), Apple (AAPL.US), Microsoft (MSFT.US) and Tesla (TSLA.US).
U.S. stocks accounted for 86% of global stock market gains, Hartnett said. The winners were growth and bond proxies, while the losers were energy and materials “as investors traded at ‘peak inflation’ and ‘peak yields’. However, the risk for bulls to be aware of is that the Fed rate hike is far from over.
Hartnett also pointed out that real interest rates are still severely negative, and the Fed’s tightening efforts are currently very weak. For example, the Fed’s total purchase of $5 trillion in bonds during the epidemic has only sold $2 trillion, but from the current retail investors Judging by sentiment and the rebound in Meme stocks, many investors seem to have forgotten that the Fed has a long way to go in raising interest rates.
In addition, from historical experience, the Fed ended the rate hike cycle with negative real interest rates in 1954. Therefore, even if CPI inflation is assumed to be halved in the next six months, the inflation rate will still be as high as 5-6% in the spring of the coming year.