fundstrat

Fundstrat says stocks have shown good performance despite hawkish Feds

Unusual Whales

Mar 9, 2023 • 1 min read

Per Business Insider

Fundstrat recently argued that despite a hawkish Fed, stocks have shown that they are still able to perform well. They expect stocks to not be crushed should the Fed continue to raise interest rates.

Fundstrat's head of research, Tom Lee, shares how stocks could still perform well despite the Fed tightening cycles and unpredictable rate hikes. So far, 450-basis points towards interest rates have been raised by Central bankers.

Lee referred to a situation in the 1980s when Fed Chair Paul Volcker raised interest rates by 19%. Despite this, the stock market jumped by a whopping 15.6%.

The Fundstrat head of research gave a statement sharing how equities could still perform due to the labor market's strength. He then shared how high rates weren't a sign of death to stocks.

Lee: "The point is that a tough Fed doesn't mean stocks need to fall at every hint of an inflation data point... This means a higher terminal rate is not the death knell for stocks."

Lee stayed bullish despite everything happening in the market, expecting that the S&P 500 would grow by 20% in 2023. In 2022, Lee said the index would reach an all-time high of 4,800.

Despite Lee's predictions, the previous year ended up 20% lower than initially expected. He remains bullish for 2023 and believes the market to end bullish, despite rates and other macroeconomic factors.

Bank of America expects the next bull run to happen only if the Feds decide to bail out the US government. The bank expects interest rates to increase by an additional $21 trillion over the next ten years.

Powell has recently stated that new data shows that the ultimate level of rates "is likely to be higher than previously anticipated."

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