The benchmark S&P 500 index is now down more than 10% for the year, and Bahnsen Group’s chief investment officer says thanks to the sell-off, there’s plenty that is on sale now.
Bahnsen’s remarks on CNBC’s ‘The Exchange’
Interestingly, David Bahnsen attributes the recent hit to the equity market to inflated valuations and not to the upcoming rate hikes. This afternoon on CNBC’s “The Exchange”, he said:
Energy is still up on the year, and more interestingly, bond yields are dropping. So, this whole narrative that equities are dropping because the Fed’s raising rates is completely inaccurate. Stocks are dropping because certain parts of the market got overpriced.
According to Bahnsen, Fed getting less accommodative has little to do with the market sell-off because it was given that the central bank will raise rates in 2022. Investors were ready for it even six months ago.
Bahnsen expects three rate hikes in 2022
Bahnsen doesn’t expect the U.S. Federal Reserve to proceed with four rate hikes this year, which is in sharp contrast to JPMorgan’s Jamie Dimon, who says he’d be surprised if the central bank raises rates only four times in 2022.
The high yield bond spreads as of this morning were only about 290 basis points. Credit is not yet reacting to this sell-off. 2018 was sort of the level where you saw what happens; credit spreads blowing out and the Fed responding. We’re not even close to that yet.
The CIO expects marginal contraction of the balance sheet that will still remain well above $4.0 trillion. Also on Monday, the Wall Street banks warned clients the market crash could get worse in the coming weeks.
La notizia Pro: Fed is NOT what’s driving the market sell-off era stato segnalata su Invezz.