Is Slowing Inflation Good News for Growth Stocks?
The Fed is slowing its rate hikes — but investors should hold their horses. The question now is how high rates will have to go before they start coming down again.
Satori Fund founder Dan Niles told CNBC last week that uncertainty over when the hike will end means he’s currently avoiding US tech stocks. He likes Singapore’s Sea Limited [SE] because a “lot of the emerging market economies, they’re getting close to stopping the hikes.”
Bill Ackman, the founder of Pershing Square Capital Management [PSH.L], believes the Fed’s 2% target “is no longer credible … without a deep, job-destroying recession.” The central bank would be wise to accept a 3% target instead, tweeted Ackman following the rate hike.
Speaking to Yahoo Finance on 8 December, renowned innovation bull Cathie Wood argued, “a change in rhetoric will get the market going.” But with Fed chair Jerome Powell maintaining his hawkish tone last week, growth stocks will likely remain on hold given that they fare better in a low-rate environment.
The iShares Core S&P US Growth ETF [IUSG] is down 29.24% year-to-date through 16 December and down 2.99% in the past month.