Why Fed Rate Hikes Under Warsh Won't Kill This Bull Market
History shows rate-hike cycles don't automatically end bull markets. Here's what Warsh's Fed could mean for your portfolio.
Let's get one thing straight: rate hikes don't automatically kill bull markets. Never have. If Kevin Warsh takes the Fed chair and starts talking tough on inflation, don't panic-sell your equities. That's the wrong move.
Warsh may be betting that the *threat* of hikes alone does the heavy lifting — jawboning markets into tighter financial conditions without actually pulling the trigger. It's a classic central banker play. But here's the twist: stocks have historically held up, and even gained, during actual rate-hike cycles. The market tends to price in the pain early, then grind higher once the path becomes clear.
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Past rate-hike cycles are your roadmap. When the Fed tightened in 2004-2006, equities rallied. Same story in the mid-1990s. Even the aggressive 2022-2023 cycle — one of the fastest in modern history — couldn't permanently derail the S&P 500. The bull found its footing. Pattern recognition matters here.
The tradeable angle? If Warsh signals hikes and the market dips on the headline, that could be your entry point, not your exit. Volatility around Fed rhetoric is noise. The trend, backed by earnings growth and resilient economic data, is the signal you should be trading off of.
Don't let Fed fear keep you on the sidelines. Warsh talking hawkish isn't a death sentence for this rally — it might just be the shakeout that sets up the next leg higher. Continue reading at MarketWatch.com
