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As US Large Caps, particularly US Tech stocks, continue to set new high after new high, many investors are questioning whether we have reached “bubble” territory.

By Dr. George Calhoun – Vestbridge Advisors, Inc. Advisory Board Member Executive Director of the Hanlon Financial Systems Center

Fourth-quarter 2023 corporate results have been the focus of investors in recent weeks, with inflation and Fed policy taking a backseat.

At the January 31st Federal Open Market Committee (FOMC) press conference, Fed Chair Jerome Powell struck a hawkish tone as he pushed back sharply against expectations that the Fed will enact its first rate cut in four years in March 2024.

If one were to rank the biggest drivers of stock market performance in 2023, mega-cap dominance and the missing recession would likely be atop the list.

The primary policy tool which the Federal Reserve uses to influence the economy is the Federal Funds Rate (or “Fed Funds Rate”), the target interest rate at which commercial banks can borrow or lend reserves overnight.

When Federal Reserve Chair Jerome Powell spoke on December 1st in his final public comments before the blackout period leading up to the Fed’s December 14th policy meeting, the tone was hawkish.

Equity markets have enjoyed a tremendous November rally that allowed the S&P 500 to break out of its downtrend pattern and retest the July 31st peak.

“Don’t fight the Fed” is a stock market mantra that has proven true thus far in 2023. The Federal Reserve’s campaign to halt inflation has been implemented by 11 interest rate hikes amounting to a cumulative 5% increase in the Federal Funds rate.

October 26, 2023 It’s rare for the bond market to dominate headlines versus stocks, but that is the case lately as the 10-Year US Treasury yield has tested 5%. While short term US Treasury yields have been well above 5% for months, the long end of the yield curve has been lower than the short…