We have put to rest the first half of 2022, and we cannot say we'll miss it. The stock market suffered its worst first half since 1970, with the S&P 5000 falling nearly 20 percent since the start of the year. The broad index is down 21 percent from its high in early January and has been in bear market territory since early June. There are some who will take comfort in the fact that the 1970 first quarter bear market was followed by a solid rebound. We are not so confident. The effective Fed Funds rate at that time was dropping from 9.25 percent in December of 1969 to 4.74 percent in December of 1970. In other words, the Fed was loosening the stance of monetary policy. Today, we have the opposite, with the Fed rapidly tightening to get inflation under control. So, we are in an unusual situation in which the economy is very likely shrinking for a second consecutive quarter while the Fed is raising rates. Federal Reserve Board Chairman Jerome Powell speaks at a news conference on June 15, 2022, in Washington, DC, after the Fed announced a three-quarters of a percentage interest rate hike. (Drew… Read full this story
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