Contributed by: TheBigFatWhale
With the latest move by the Fed, where they are looking to have 3 interest rate hikes in 2022 and into reducing their balance sheet, growth stocks have not been faring well. The move by Fed is a move towards a monetary tightening policy that will drain the exodus of liquidity that has been pumped into the economy since early 2020.
Source: Tradingeconomics.com- Fed Balance Sheet
The Fed Balance sheet has more than doubled since 2020 which is a worrying sign that things are going out of control. Therefore, the indication by Fed to reduce their balance sheet is a sound and prudent move provided they are really serious about doing it. We touch on our previous article about the 6 indicators to gauge if the S&P 500 is peaking with the Fed Balance sheet as one of our concerns.
With a potential stoppage of easy money, the prospects for growth stocks could be...