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Once upon a time there was a stock market with what the central bank called “transitory” inflation. Wall Street money managers worried that the central bank was behind the curve on fighting inflation and projected that interest rates would go up in September of that year.

Then the money managers decided that the rate increases would come as early as July. And then they moved the goal posts again to consider an increase in March.

And then interest rate projections–and inflation fears–ran amok.

Rapidly forecasts rose to include two increases by September. And then three in 2022. And then some of the heaviest weights on Wall Street weighed in with warnings of three or even four interest rate increases in 2022.

A Reuters poll conducted between January 12 and January 19 showed that analysts believe that the Federal Reserve will raise its benchmark short-term interest rate three times in 2022, starting in March, to 0.75% to 1.00%. (Back in December this poll predicted just two interest rate increases. Significantly, 40 of 86 analysts expected the central bank to raise rates at least four times in 2022.

But we haven’t stopped there.

Today it’s a bull market in forecasts of interest rate increases–even as the NASDAQ Composite index moves into correction territory and the Standard & Poor’d 500 is poised at the border.

Interactive Brokers founder Thomas Peterffy told Yahoo Finance on Wednesday, January 19, that he sees the Fed raising interest rates to 4%, 5% or even 6%. “I am worried about high interest rates because the Fed is talking about raising rates to 1% or even 2%. Inflation is 7% — 1% or 2% doesn’t mean anything.”

Do I hear a higher bid? Well, sure.

The Federal Reserve will probably lift rates eight times to tame inflation, Bruce Richards, chief executive officer and co-founder of Marathon Asset Management, told Bloomberg on January 19. Which will stifle economic growth and eventually bring on a recession. Marathon expects U.S. economic growth to be in the range of 1.5% to 2% annualized at the end of 2022, compared with the estimated rate of around 4% for the year.

I don’t know which of these forecast is correct. Or even if any of them will be in the longer term.

But in the short term the fact that forecasts of higher interest rates have run amok is actually a positive for the financial markets. This is how Wall Street typically changes gears, going from the excessive optimism and downright complacency of November to a bull market on inflation fears by January.

The shifting of gears typically results in an over shoot before sentiment rebounds to find a new equilibrium–a consensus on, say, one interest rate increase in March and another one or two in September. Money that flowed to bets on 4 or 5 or 8 interest rate increases will slosh back toward the new consensus.

Which won’t be the over-optimism of November. But which also won’t be the excessive fear of January.

It may take until the Federal Reserve meets on March 16 and doesn’t, I believe, cause the world to end by starting off its interest rate increases with a 50 basis point move (instead of the traditional 25 basis point increase) and a clear announcement that two more more interest rate increases are on the schedule, to move the market back to its new consensus equilibrium.

So be patient. And protect your portfolio how you can while you look for bargains in the stocks you’ve always wanted to own.

But this kind of overshoot is exactly what we typically see before a market reset.