3 Assets That Have The Most To Fear From The Fed

Feb 02, 2022

3 Assets That Have The Most To Fear From The Fed

A week is nearly a lifetime in the financial markets.

The market convulsed last week at the prospect of the Fed shifting away from crisis-era stimulus toward tightening for fighting inflation, with equities dropped at the prospect of higher interest rates.

On Monday, Wall Street's risk appetite slowly returned. While investors are still digesting the consequences of the next rate rise round, they are once again in a buying mode (at least for now). The comeback was driven by battered tech companies, with the Nasdaq's 3.1 percent gain just escaping its weakest January on record and delivering its strongest day of the year so far.

While markets have recovered slightly, the impact from January's sell-off is likely to persist. Indeed, it is possible that things may worsen further from here.

"It's hard to forecast the market's next moves, but I believe there is downside risk, and active management has a significant advantage at the moment in terms of cherry picking and stock picking and differentiating between the names," Lauren Hill, Westwood Group's consumer/retail analyst, said.

With the central bank wearing its armor in order to kill the dragon known as inflation, the only remaining uncertainties are how much and how soon rates will climb.

Wall Street is updating its prediction for the central bank's rises at the fast pace — with Bank of America analyst Ethan Harris saying that the institution anticipates as many as seven increases in 2022.

Whether the Federal Reserve continues to play small ball or becomes more hawkish is an unanswered question. Whatever the case, the upcoming age of monetary tightening will have investors scrambling to catch numerous falling knives, and we haven't even begun to touch the surface of how average buyers will respond to increasing borrowing costs.

Considering these factors, the following asset classes seem to be the most vulnerable:

Stocks

Sam Stovall of CFRA Research informs that January is an excellent indicator for the year's temperature. And the instability that has rattled equities since the 2022 start has wreaked enduring damage that will be difficult to get rid of.

"Three indicators popularized by The Stock Trader's Almanac — the Santa Claus Rally, the first five days of January, and the January barometer — provide insights into the performance of the US stock markets in the upcoming calendar year," Stovall noted.

"This year's Santa Claus Rally happened, only to fade within the first five days of the new year and continue weakness throughout the whole January. Since 1945, on eight occasions this combination happened, the S&P 500 fell 9.6% for the whole year, down in all but one year (2014)," he noted.

"Investors may be rewarded with a short-term relief surge. Sadly, this increase will almost certainly not be the end of the downturn," the expert warned. Caveat emptor (Let the buyer beware), as the old saying goes.

Crypto Assets

Over the weekend, it was discovered that a new cryptocurrency protocol dubbed Tornado Cash was a key to at least one high-profile ethereum hacker attack. It serves as a sharp warning that during periods of market instability, incidents of fraud, theft, and criminal activity increase in frequency, and cryptocurrency is no different.

"The crypto correction demonstrates that bitcoin and other digital currencies are becoming increasingly connected with traditional financial market indicators," Goldman Sachs' Zach Pandl commented last week.

"Over time, further advancements in blockchain systems may create a long-term tailwind for some virtual asset prices. However, these securities will be susceptible to macroeconomic influences, such as Fed tightening," Pandl noted.

Housing

Where people live and how much they pay for it is becoming a more pressing issue in an inflationary economy poised to be upended by increased borrowing rates.

The Economist rightly notes in its new edition that the impact of rising rates on the real sector is slower and more difficult to predict, with homeowners burdened with large mortgages taken on during a "super-cheap money" period, which is about to end.

While the real estate market has been providing contradictory signals, 30-year mortgage rates remain around their peaks in over two years, having increased by more than half a percentage point in a month. At the same time , the hot property market is driving up rental rates throughout the nation, which is a big component of the inflation narrative.

"You've got a lot of people that are possibly being priced out of the real estate market," RentPath chief executive officer Jon Ziglar mentioned. So what happens to that effect when interest rates begin to go up? Truly, buyer beware.

Subscribe Our Newsletter

Project EV shines amidst economic challenges

Nato

Project EV: A Bright Future Amidst Economic Challenges

Project EV shines amidst economic challenges as supply and demand dynamics shape the electric vehicle industry. Here is why.

Technology
Crypto Lending Firm Genesis Is Planning to File for Bankruptcy

Alexander

Insider News: Crypto Lending Firm Genesis Is Planning to File for Bankruptcy

DCG, a parent company of Genesis, is reportedly in confidential negotiations with creditor groups regarding its lending unit's potential bankruptcy.

Crypto
Get the ultimate solution: B2BinPay Get the ultimate solution: B2BinPay
Sponsored
Tamta

Best Technical Analysis Indicators
Throughout history, people have always looked for ways to make money, and trading has become a popular choice today. But successful trading isn't about luck or guesswork - it requires careful analysis to make the right decisions.

discover
Is Real Estate Investment Trusts a Good Career Path?

Alexander

Is Real Estate Investment Trusts a Good Career Path? — Opportunities in 2023

For those looking to break into the real estate industry, Real Estate Investment Trusts (REITs) can provide exciting and rewarding career opportunities. According to the Nareit study, REITs support more than three million full-time jobs in the US, including brokers, investor relations, accountants, architects, designers, financial analysts, property managers, marketers, developers, human resources, and many others.

Investing
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Alexander

    What Is an Interest Coverage Ratio? How to Use This Financial Metric to Evaluate Company Health

    Interest Coverage Ratio Explained

    Hazem

    After-Hours Trading: Can You Trade After Financial Markets Close?

    After-Hours Trading Explained

    Alexander

    How to Scale a Crypto Exchange Business and Stay Competitive

    how to scale crypto exchange business

    Constantine

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Alexander

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Hazem

    Megaphone Pattern​: What Is It? How to Use It In Trading

    Megaphone Pattern​: How to Read & Trade with It

    Constantine

    Top 5 Liquidity Bridge Providers in DeFi

    Top 5 Liquidity Bridge Providers in DeFi

    Hazem

    Max Funded IUL Explained: Is It a Legitimate Financial Strategy?

    Understanding Max Funded IUL

    Alexander

    Tax Refund Timeline: When Will You Get Your Tax Return?

    how long does it take for tax refund

    Constantine

    Crypto Liquidity — What is it, and How to Measure It?

    What is Crypto Liquidity and How to Measure It?

    Constantine

    AI in Finance: A Game-Changing Trend Shaping the Industry

    AI in Finance

    Hazem

    5 Ways to Make Money with ChatGPT and Build Your Wealth

    Make Money with ChatGPT

    Constantine

    Top AI Companies to Invest in April 2025

    Top AI Companies to Invest in March 2025

    DeepSeek vs ChatGPT: Which AI Technology is Better For You?

    DeepSeek vs ChatGPT: Feature-by-Feature AI Tool Comparison

    Constantine

    Top Solana Meme Coins in 2025: Best Presales and Where to Buy

    Solana Meme Coins 2025

    Alexander

    How Renewable Energy Stocks Can Supercharge Your Portfolio

    How Renewable Energy Stocks Supercharge Your Portfolio

    SEC Crypto Regulations: What Financial Advisors Need to Know

    SEC Crypto Regulations: Insights for Financial Advisors

    Hazem

    The Cup and Handle Pattern – How Trade Using This Bullish Indicator?

    Cup and Handle Pattern – How to Predict Price Breakouts?

    Hazem

    Year-Over-Year (YoY): What It Means? How It’s Used in Finance?

    Year-Over-Year (YoY): How to Calculate Business Performance?

    Constantine

    What is WAGMI and NGMI? Understanding Crypto Slangs

    WAGMI vs. NGMI

    Alexander

    Litecoin Mining Guide: How to Get Started in 2025?

    Litecoin Mining Guide: How to Get Started in 2025?

    Constantine

    What is Thruster (THRUST): An Advanced AMM for the Blast Ecosystem

    Thruster (THRUST): How Does it Revolutionise DeFi?

    Constantine

    How Does Polymarket Work? Detailed Guide

    How Does Polymarket Work? Comprehensive Guide

    Constantine

    Coinbase vs. Сoinbase Pro: Which Platform is Right for You?

    Coinbase vs. Coinbase Pro
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.