Drawing Parallels from 1999-2000 Hiking Cycle
During the 1998-2000 period we had a 20% correction in SP500 in the LH of 1998 followed by WTI bottoming in the low teens and 3 very fast rate cuts
In the following 8 months up SP500 gained just shy of 50%, WTI gained 60% and the first 25bps rate hike come in 30th of June 1999 SP500 corrected to retest previous low, then second rate hike of 25bps come in on 24th Aug 1999 SP500 corrects again briefly trade 3% below previous low. 18th Oct 1999 will remain the low for the next 16 months !
From the first rate hike in June 1999 and the last in May 2000 (175bps) the SP500 gains 8% and WTI 160%
The Market, both SP500 and WTI did not start breaking until Sep 2000 that is 14 months from the first rate hike.
The parallel to today are March 2020 correction 35%, WTI bottoming in April, Rates cuts to 0.00
SP500 from Mar 2020 to Jan 2022 gains over 100%, WTI gains 300%, first rate hike in sight
My conclusion is that the hiking cycle isn't going to break the market, Energy/Cost of living will be where the pay is going to come from.
Lets put it that way during 1999-2000 hiking cycle the music never stopped it only slowed down it stopped 8 months later when there was no more BUYERS, I believe we will follow a similar path into 2022-2023
In the following 8 months up SP500 gained just shy of 50%, WTI gained 60% and the first 25bps rate hike come in 30th of June 1999 SP500 corrected to retest previous low, then second rate hike of 25bps come in on 24th Aug 1999 SP500 corrects again briefly trade 3% below previous low. 18th Oct 1999 will remain the low for the next 16 months !
From the first rate hike in June 1999 and the last in May 2000 (175bps) the SP500 gains 8% and WTI 160%
The Market, both SP500 and WTI did not start breaking until Sep 2000 that is 14 months from the first rate hike.
The parallel to today are March 2020 correction 35%, WTI bottoming in April, Rates cuts to 0.00
SP500 from Mar 2020 to Jan 2022 gains over 100%, WTI gains 300%, first rate hike in sight
My conclusion is that the hiking cycle isn't going to break the market, Energy/Cost of living will be where the pay is going to come from.
Lets put it that way during 1999-2000 hiking cycle the music never stopped it only slowed down it stopped 8 months later when there was no more BUYERS, I believe we will follow a similar path into 2022-2023