Odd Lots Here's What Just Happened to the Stock Market and the Economy
May 9, 2022
Neil Dutta, Head of Economics at Renaissance Macro Research, and Luke Kawa, Allocation Strategist at UBS Asset Management, delve into the chaos of today's financial markets. They discuss the drastic downturn in growth stocks and rising inflation's impact on the economy. The duo breaks down the Federal Reserve's aggressive interest rate hikes and examines the effects of global events like the Ukraine invasion and China's lockdowns. Their insights offer strategic advice for navigating this turbulent economic landscape and managing investments wisely.
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Economy vs. Market
- The economy is currently performing well, with aggregate hours worked suggesting strong underlying growth.
- Market adjustments to interest rate outlooks are impacting equity markets, but the economy remains relatively stable.
Market Volatility Drivers
- Current market volatility is difficult to explain with traditional narratives, as flows are driving pro actions, not the other way around.
- Three main risks are Fed tightening, the Russia-Ukraine war's supply chain impact, and China's economic uncertainty.
Tech Boom Reversal
- The tech and growth stock boom has ended, with significant losses in market value.
- This marks a major shift after a 12-year bull market, impacting investors who haven't experienced such a downturn.