Still Think A Rate Hike Would Hammer The Stock Market?

It’s increasingly become an article of faith that the end of QE (i.e., a rate hike to zero) portends trouble for the market.

This table from Goldman Sachs (via @burak_tekes) disputes the idea that stocks do bad after rate hikes.

chart

Photo: Goldman Sachs

Interesting, but, there’s a logical reason why stocks would usually do well in the year after a rate increase. Rate increases usually come when the economy is strong, and a strong economy should help stocks.

The economy is only so-so right now. Also, the rules are (according to Richard Koo, anyway) different in a balance sheet recession, as opposed to a normal recession, so past rate hikes might not be applicable.

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