Stocks Rise When the Fed Hikes Rates

It's amazing to me the nonsense being trotted out by Wall Street when anyone with a computer can pull up long-term data. The latest is stocks rise when rates are first hiked. True in the past 40 years because the Fed hiked when the economy was recovering and to head off inflation. Draw your attention to around March 1966. The stock market rose until rates hit about 4.75 percent and then it was game over for a decade. Stocks would test that high area, but wouldn't clear that old high until 1983.

Leave aside that there is really no precedent for the current situation, outside of possibly Japan. In which case, the precedent is not good for stocks.

This is what stocks look like under high inflation. The Federal Reserve can no longer rescue the market without creating high inflation. Federal Reserve Chairman Jerome Powell openly stated in his latest confirmation hearings that the Fed can do nothing about supply, but can stimulate demand. Any student of econ 101 knows that stimulating demand when supply is fixed or falling will create explosive prices increases. The Fed knew exactly what it was doing. It will do it again. Next time though, the market knows what to do. Buy crude oil, copper, fertilizer, wheat...