How The Fed Could Induce A Bear Market In 2017
Cam Hui | Sep 23, 2016 06:22AM ET
The Federal Reserve has spoken (see FOMC September statement ). With three dissenting votes on the FOMC, a December rate hike is more or less baked in. The Fed will take a gradual approach to rate hikes, with the median "dot plot" forecasting a December rate hike and two more in 2017.
While the market doesn't really believe in the "dot plot" projections anymore, as actual action has consistently been below projections, this time may be different.
There is a case to be made that the market is poised for a nasty upside surprise in 2017, where the pace of rate normalization will be higher than expected. Should such a scenario unfold, it would be very bearish for stock prices.
DISCLAIMER: Cam Hui is a portfolio manager at Qwest Investment Fund Management Ltd. (""Qwest""). This article is prepared by Mr. Hui as an outside business activity. As such, Qwest does not review or approve materials presented herein. The opinions and any recommendations expressed in this blog are those of the author and do not reflect the opinions or recommendations of Qwest. None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this article constitutes investment advice and any recommendations that June be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions. Past performance is not indicative of future results. Either Qwest or Mr. Hui June hold or control long or short positions in the securities or instruments mentioned."
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