Will a rate-hike kill the bull-run in stocks?
Hey my dear Hive and LeoFinance Community!
On the 10th of december we will find out how the now-not-so-transitory inflation worked out in november, when the US-CPI data get's revealed. Jerome Powell of the FED indicated, that the federeal reserve is not so confident anymore, that the rate of inflation will go back to the goldilocks-span between 2 and 3 percent anytime soon.
Meanwhile we are still in the longest bull-run in stocks in history. Especially growth-stocks in the tech sector performed quite well.
But what if the federal reserve bank of the united states decides for a rate-hike sooner than anyone expects?
Most of those companys in the technology-sector invest a lot of money on their future growth and are therefore highly indebted and not yet profitable. If the FED decides on a rate hike it's escpecially painful for companys and individuals that carry a lot of debt. The profit-margins will drop considerably in this case, what investors absolutely don't want to see.
During the taper-tantrum we saw something similar, when there was a huge sell-off in the stock market, because of a hike in interest rates.
History won't repeat itself, but it rhymes, losely quoting Marc Twain. If it does, it's going to be very painful for a lot of people.
What's your point of view on this topic?
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Collapse the economy to open the economy,,,,simple.