Investment themes Real Money Columnist James ‘Rev Shark’ Deporre identified three months ago remain very much in play.
As early as January, Real Money Columnist James “Rev Shark” Deporre was pointing out the themes that are dominating markets this year.
At the center of it all was the newly aggressive Federal Reserve.
“A hawkish Fed is a theme that the market has not dealt with for any sustained period since before the 2008-2009 Great Recession and bear market,” Deporre wrote on Real Money earlier this year. “Market players have grown used to the Fed reversing course back to dovish after a bit of a taper tantrum, but this time the theme is sustained and will take some time before it can be fully discounted.”
Rising bond yields are “causing more rotational action out of big-cap technology and growth names,” Deporre added.
At the time in January, the surging omicron variant in the U.S. was “disrupting the economy, keeping the labor market tight, and hurting supply chains. These forces are creating more inflationary pressures, and the Fed is well behind the curve,” Deporre wrote.
Now, although the virus has retreated in the U.S., it’s raging in China, forcing lockdowns in major cities including the economic capital of Shanghai.
At the time Deporre was writing in January, he said “there are now pundits that believe that the Fed should go to a half-point increase in March to create some shock and awe.”
Now, from the release of the Fed minutes for the March meeting, we now know that many members of the FOMC wanted to do just that, and only the Russian invasion of Ukraine and ensuing economic mayhem held them back.
And at this point, 50-basis-point hikes are all but baked in to the Fed’s next two meetings.
In January, Deporre wrote that “the one clear thing about this market is that volatility is likely to remain high.”
It was true then and it remains true now.
