The Biggest Risk To Stocks Is Not The Fed
0The Biggest Risk To Stocks Is Not The Fed The most significant risk to stocks is not the Fed. Over the next few months, you will see a lot of articles suggesting that initial rate hikes from the Fed don't impact stocks. "Historical analyses put together by Evercore ISI's Ed Hyman and The Sevens Report's Tom Essaye show that the SP 500 typically fares well when the Fed raises rates for the first time in a tightening cycle. The SP 500 rose 7% from there to post a gain of 19.5% for the year." - Fred Imbert, CNBC When the Fed initially starts hiking rates, it is usually during a strongly trending bull market. It is the point where the increase in rates causes something to break either in the economy, credit markets, or a change in bullish psychology. Given higher stock prices compensate corporate executives, it is not surprising to see companies opt for a short-term benefit of buybacks versus investment. The surge in the repurchase of shares over the last decade remains one of the more significant supports to the financial markets.