“Thank you, sir, may I have another?”
This famous line from Kevin Bacon’s character Chip on the 1978 film Animal
House comes to mind as we watched investors get spanked by the Fed with the
recent series of hikes in the fed funds rate. After the first 0.25% hike in March,
the Fed followed up by another 0.50% (or 50 basis points) increase in early May,
and another 75 bp boost in June, at which time it was announced yet another
likely 75 bps hoist in July. As a result, the decline in the markets in the first
quarter turned out to be only an introduction to what lie ahead as the S&P 500
fell another 16% in the second quarter bringing us into bear market territory.
The decline was as fast and as furious as were the hikes in rates which forced
investors to reprice stocks and bonds down to new levels. The quarter ended
with stocks turning in their worst first half of the year in over 50 years...
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