![]() The same happened in the final quarter of 2017, he said.Īnother flag has been raised within high-yield debt, he said. “There have only been two times in history (1952-69) that fixed income prices dropped in a two-year period - 2022 will likely be the third time,” he said.Īnd as “credit anticipates, equities confirm,” he said, noting how the two assets decoupled in the third quarter of 2014 when the Fed issued policy normalization plans. Kass said investors are embarking on a rare event where global bonds are concerned. Kass sees a negative year for stocks and a “normal 15% valuation reset lower,” historically consistent with what happens when the Federal Reserve lifts interest rates by 100 basis points when valuations are elevated.Īnd retail investors who embraced meme stocks are probably all but finished playing here, while cryptocurrency losses are also potentially a worry for equities as a 50% fall in bitcoin in recent months, for example, could be “damaging psychologically” to the market. ![]() That is closing at 12 noon because of a lack of workers.” Kass noted he was short Starbucks stock. “Those issues will “not be resolved this year - just go to your local Starbucks Ongoing logistical and supply chain issues will exacerbate the situation, Kass said in the note sent out Tuesday. Read: How there’s been a Greenspan-sized tightening to the economy even before the first Fed hike January consumer price inflation climbed to a hotter-than-expected 7.5% for the year on Thursday, pressuring stocks and sending the 10-year Treasury note yield Kass warned of beastly inflation in the next two years - “valuation and market unfriendly. ![]() He fears the Federal Reserve has this time waited too long to raise interest rates - the later stage of an economic recovery - and risks “causing an accident,” which he thinks will start in the emerging-market debt market. Kass pointed to a “number of recent vintage and market unfriendly developments” that have driven his pessimistic views, such as inflation and interest rates rising into what looks like a slowing economy, as companies struggle to grow profit and revenue amid shortages and price pressures. Since 2008, February has been slightly kinder, with gains of 1.3% and 1.6%, respectively. ![]() Lose more than 5% and the worst start for the Nasdaq Composite On the heels of a downbeat beginning to the year that saw the S&P 500 ![]()
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