The Simple Reason US Stocks ‘Need’ To Fall Another 15%

Monetary policy works on a lag, but over and over again in 2022, the Fed has emphasized the extent to which hawkish rhetoric, and the market's reaction to that rhetoric, is already working to tighten financial conditions. In the pandemic era, the majority of the FCI easing impulse, as measured by Goldman's financial conditions index, came from the equities component. That's why many analysts contend the Fed would be loath to countenance a rally back to record highs on US equity benchmarks -- it