Fed's Rate Hike Halt. What's Next?

Recent economic data indicates that inflation eased more than anticipated in October, leading to speculation that the Federal Reserve may be concluding its aggressive rate-hike campaign.

And it doesn’t take a rocket scientist to open a chart of the Nasdaq or SP500 and put two and two together.

That… plus the big red guy coming at the end of December spells “Melt-Up” for stocks.

According to Ryan Detrick, chief market strategist at Carson Group, the S&P 500 index tends to rise an average of 14.3% within 12 months of the Fed's final rate hike.

However, it's not an absolute guarantee of favorable returns. Notable exceptions occurred in 1981 and 2000 when, despite pausing rate hikes, the market experienced significant losses due to other prevailing economic factors.

Economic conditions continue to deteriorate globally at a rapid pace as well, which we will cover more in the coming days.

But in short, if the Fed pauses here and the stock market breaks all-time highs, the Fed could then continue to hike - fearing the massive stock rally will spill over to inflation and consumer spending.

But since the underlying economy has been damaged already by the historic and rapid rate hate campaign, this could lead to a stock market bust towards the end of 2024.

The likes of which could lead to 50-80% declines across the indices… which is the NORM for recessionary bear markets.

The last time we saw such drawdowns were 2000 and 2008.

Is this time different?